Highest SEC Yield Funds

We’re going to look at the highest SEC Yield ETFs on the market.

Our criteria:

• At least 3 years of history. (The ETF space exploded in the mid-2020s and many funds have short histories where it’s hard to judge their performance.)
• SEC yield of at least 5% or so. We’ll start with the highest yields and go down.
• Expense ratio of under 1.00%. It’s hard for ETFs to add value (relative to other funds on the market) when their expense ratios are high.

We’ll give some running commentary on many of them, such as their sustainability and their potential diversification properties (i.e., do they act differently to the types of assets that most portfolios have?).

Key Takeaways – Highest SEC Yield Funds

• We screened for high SEC yield ETFs with 3+ years history, ~5%+ SEC yield, and sub-1.00% expense ratios to look for the best income ETFs on the market.
• SEC yield is used as a standardized, comparable income metric. It’s based on net investment income minus expenses.
• SEC yield helps cut through marketing and excludes capital gains and irregular distributions.
  • This makes fund to fund yield comparisons cleaner.
• Nonetheless, it’s a snapshot. It may differ from actual distributions, and ignores capital gains.
• The yields we look at come from different engines:
  • option premium
  • credit spread carry
  • leverage
  • bank loans
  • CLOs
  • preferreds
  • REITs
  • MLPs, and
  • emerging market debt
• Best “quality yield” usually comes from cash flow or credit based income.
• Some of our favorites as a function of quality yield, yield sustainability, and diversification potential:
  • AMLP or MLPA – Energy infrastructure cash flows, real-asset exposure, inflation sensitivity. MLPA is similar to AMLP with broader exposure.
  • FLBL – Senior secured floating-rate loans with strong rate insulation (i.e., rate resets).
  • SEIX – Higher-quality senior loans with low equity correlation.
  • SRLN – Scalable senior-loan exposure.
  • HYUP – Clean credit-spread carry without leverage.
  • CLOZ – BBB-B CLO tranches with structural credit protection.
• Yield is just one aspect, so they won’t necessarily be your entire portfolio. Many good funds, not covered here, return primary from capital appreciation.

First, What’s SEC Yield?

The 30-Day SEC Yield is a standardized, SEC-mandated measure that gives allocators a clear idea of the income a fund is generating from its underlying holdings.

It’s based on the income (interest or dividends) earned over the past 30 days, after subtracting out fund expenses.

SEC Yield Calculation

You can find the yield by taking the fund’s net investment income over the most recent 30-day period, divided by the fund’s maximum offering price (or NAV for ETFs).

It’s then annualized (multiplied by 12).

This would be the yield the holder of it would receive if the fund continued to earn the same rate over the next year.

30-Day SEC Yield = [(Net Investment Income over the last 30 days − Fund Expenses) / Net Asset Value] * 12

Example

Let’s say a fund’s NAV is $25 per share. Its expense ratio is 0.20% annualized.

It provides a monthly dividend of $0.12 per share.

So the monthly yield is $0.12/$25 = 0.48%

If we multiply by 12, that’s 5.76%.

Subtracting out the annual expenses of 20bps, that’s a total SEC Yield of 5.56%.

So, for an individual trader looking to make $1,000 per month from this fund, or $12,000 per year, they would need to buy:

$12,000/0.0556 = $215,827 worth to make this happen

If $25 per share, they would need to buy $215,827/$25 = 8,633 shares

Why It’s Valuable

It’s a regulated metric.

So, it’s not perfect, but it’s useful because the marketing that investment companies put out usually extolls the benefits of their fund but hides weaknesses.

It can be especially useful for retail market participants, who often don’t have the training or background to assess what they’re being told.

So, it’s relatively objective and helps make yield measures comparable.

Because it’s standardized across all mutual funds and ETFs, it allows you to compare income potential between funds with a fair baseline.

It removes capital gains, special distributions, or fluctuating monthly payouts.

Of course, income or yield is just one factor.

Limits of the SEC Yield

It’s simply a snapshot of the yield.

It may not give you the actual distributions you receive, especially in funds that distribute irregularly or seasonally.

It can therefore underreport income.

It also doesn’t reflect any capital gains.

With that said, let’s get into the highest SEC yield funds.

Highest SEC Yield Funds

Please note that yields change over time, as well as other statistics.

Please be sure to research them individually.

7.47%+ Yields

JEPI (SEC yield ~8.2%)

JEPI’s yield is structurally supported by systematic equity index call overwriting, not leverage or fragile balance sheets.

The income comes from option premium plus a small amount of dividends (from the underlying index), so sustainability depends on volatility and equity prices. 

In portfolio terms, JEPI behaves more like a low-beta equity plus short volatility exposure. 

It diversifies traditional equity risk by dampening drawdowns, but only slightly. Its correlation to the S&P 500 is still approximately +0.93.

It gives a bit of a different risk profile.

But it’s still equity-cycle sensitive. It will underperform in strong bull markets and only slightly outperform the index (but still do poorly) in drawdowns.

JEPQ (SEC yield ~11.5%)

JEPQ is a higher-octane cousin to JEPI, with more exposure to NASDAQ volatility harvesting.

The SEC yield is elevated because option premiums on growth stocks are richer. Sustainability is decent as long as implied volatility remain high, but drawdowns can be steeper than JEPI in tech-led selloffs.

Diversification value is fairly weak, not high. It still correlates strongly to growth equity regimes. 

At the same time, it provides income uncorrelated to bond coupons.

MORT (SEC yield ~13.0%)

MORT’s yield reflects mortgage REIT leverage and spread carry, not free income.

Example of this business model

For instance, a mortgage REIT borrows overnight at 5%, buys mortgage securities yielding 7%, and earns the 2% spread carry.

It applies 6-8x leverage to boost income. Interest-rate swaps hedge duration. But rising funding costs or spread widening can hit returns.

Sustainability is highly regime-dependent.

When funding costs rise or yield curves invert, payouts get cut quickly.

From a diversification standpoint, mortgage REITs are rate-sensitive, liquidity-sensitive, and crisis-fragile. 

As a result, they’re often poor risk hedges.

It isn’t defensive income, but macro carry exposure.

REM (SEC yield ~9.7%)

REM looks similar to MORT on the surface. But its broader composition smooths volatility slightly.

Still, the SEC yield is ultimately tied to repo financing, prepayment dynamics, and credit spreads.

Sustainability is cyclical.

REM often acts like a hybrid of financial equities and leveraged fixed income. This means correlations spike during crises.

KBWY (SEC yield ~8.2%)

KBWY’s yield comes from small-cap equity REIT dividends.

Small REITs are sensitive to credit availability and regional real estate stress. Refinancing ability matters too.

The yield can be cut in downturns.

Diversification value is low, as KBWY tends to correlate with small-cap equities and other REITs during risk-off periods.

SRET (SEC yield ~8.0%)

SRET is an equal-weight global REIT income play.

The yield looks attractive, but sustainability is uneven because many constituents are weaker balance sheets kept alive by cheap capital cycles.

Its diversification benefit comes from geographic dispersion rather than asset-class differentiation. There’s some value in that. Past data has favored US-heavy allocations, but geographic diversification is better than not having it.

SDIV (SEC yield ~8.0%)

SDIV’s yield is mechanically high because it screens for dividend payers globally.

But you’ll also notice in the chart above that its longer-term performance is spotty due to payout quality.

Sustainability is poor over full cycles.

Distributions often reflect capital return or deteriorating fundamentals.

Diversification is superficial.

It adds international exposure but not true factor or structural diversification.

AMLP (SEC yield ~8.1%)

AMLP’s yield is grounded in energy infrastructure cash flows, rather than financial engineering.

Sustainability depends on volume throughput and energy demand, rather than spot oil prices. That’s a plus.

Diversification is somewhat meaningful because MLPs historically correlate more with inflation and real assets than with growth equities.

Tax structure (many involve opening a K-1) and regulatory risk are the main caveats.

Asset Correlations

MLPA (SEC yield ~7.9%)

MLPA offers similar exposure to AMLP but with more of a global tilt.

Yield sustainability is comparable, though slightly diluted.

Diversification properties are strongest when energy infrastructure is driven by long-term contracts rather than commodity speculation.

This is one of the more legitimate real-asset income diversifiers on the list.

FLBL (SEC yield ~7.7%)

FLBL’s yield comes from senior secured floating-rate loans.

Sustainability is strong as long as defaults remain contained.

The income resets with short-term rates, so this makes it one of the best hedges against duration risk.

Diversification is solid versus Treasuries and growth equities, though correlations rise in credit stress.

Here we can see correlations with various types of assets – e.g., stocks, gold, muni bonds, and managed futures:

Asset Correlations

HYUP (SEC yield ~7.7%)

HYUP delivers high yield with lower volatility, which suggests more credit risk than duration risk.

Duration risk is more continuous while credit risk is more episodic.

The yield is supported by credit spreads, not leverage.

Sustainability depends on default cycles.

Structurally it behaves closer to a carry strategy.

Among income ETFs, this has one of the cleaner risk-adjusted profiles.

It correlates quite heavily with stocks.

Asset Correlations

Big picture takeaway

So, as we’re starting to see, these yield ETFs fall into very different buckets, and confusing them leads to bad portfolio construction:

• Option-based equity income (JEPI, JEPQ) – Sustainable income insofar as volatility remains high, equity-linked, volatility-dependent. Still loses during drawdowns. Not much capital upside.
• Leverage-driven carry (MORT, REM) – Fragile and regime-dependent. Poor crisis behavior.
• Cash-flow or credit-based income (AMLP, MLPA, FLBL, HYUP) – The most genuine diversification potential.

If your goal is income that actually behaves differently than stocks and bonds, the third bucket matters far more than headline yield.

6.70%-7.44% Yields

CLOZ (SEC yield ~7.3%)

CLOZ earns income from BBB-B rated CLO tranches, which sit above equity but below senior debt.

The yield is driven by loan spread carry plus floating-rate coupons.

Sustainability is relatively strong with the obvious exception of recessions/bad economic times, as this is when defaults spike.

Diversification is decent because CLO cash flows are rate-resetting.

They’re also structurally different from corporate bonds because they’re securitized pools of senior loans with both tranche-level credit enhancement and cash-flow waterfalls.

So losses are absorbed by lower tranches first. Returns depend more on loan performance and structure rather than on corporate bond duration or issuer-specific balance sheets.

We can see correlations to other asset classes going back to 2023.

Asset Correlations

SEIX (SEC yield ~7.3%)

SEIX holds senior secured floating-rate loans. This gives it durable income while short rates remain elevated.

The yield adjusts with policy rates, so it’s relatively strong against duration-heavy bonds.

Credit stress is the main risk.

Diversification is strong against Treasuries and growth equities, but correlations rise in deep recessions.

Asset Correlations

SRLN (SEC yield ~7.2%)

SRLN provides similar exposure to SEIX but with more scale and liquidity.

Yield sustainability depends on default rates staying contained.

This behaves like a credit carry sleeve.

You get rate insulation but limited equity crash protection.

It’s correlated more heavily with the S&P 500 than SEIX.

HYGv / BBHY / SPHY cluster (SEC yields ~6.7-7.2%)

These high-yield corporate bond ETFs earn income from credit spread compensation.

Sustainability is reasonable across cycles but will fall in recessions via defaults and downgrades.

Diversification versus equities is modest.

Those looking for diversification to stocks generally won’t prize high-yield bonds.

In risk-off environments, these funds often behave like low-volatility equities, rather than defensive bonds like Treasuries or high-investment grade corporate bonds.

PGHY (SEC yield ~7.0%)

PGHY adds non-US high-yield credit.

So here you’re getting FX, regional, political, and legal risk.

Many want this for wider exposure outside the US and dollars.

Sustainability depends on how well global growth holds up.

Diversification is slightly better than US-only high yield. But it’s still credit-cycle dependent.

PFFV (SEC yield ~7.3%)

PFFV holds variable-rate preferred securities, which lessens your dependence on rates falling or holding steady versus traditional preferreds.

Yield sustainability is decent.

But preferreds are still subordinate capital to bonds, so stress periods can force dividend suspensions.

This equity risk is what drives a higher premium relative to bonds.

Diversification is moderate, sitting between equity and fixed income.

Asset Correlations

VEMY (SEC yield ~6.7%)

VEMY’s yield comes from emerging-market sovereign and corporate debt.

As such, it mixes credit, FX, and political risk.

Correlations will be high relative to stocks and many other forms of bonds.

Asset Correlations

ALTY (SEC yield ~7.4%)

ALTY blends income assets dynamically. 

Will still have high correlation to equities.

SEA (SEC yield ~6.7%)

SEA’s yield is equity-driven and tied to cyclical global trade volumes.

Sustainability is weak across downturns.

Higher than normal volatility.

Diversification is limited because it behaves like a volatile sector equity with income attached.

Takeaways From This Batch

The strongest diversification here comes from floating-rate credit and CLO structures, not traditional high-yield bonds or equity income.

SEC yield alone hides whether income is structural, cyclical, or fragile.

6.44%-6.70% Yields

This group is dominated by high-yield credit and floating-rate loan exposure.

SEC yields cluster around 6.4%-6.7%, and the differences are more about risk drivers than headline income.

US high-yield corporate bond ETFs such as HYBL, HYLB, USHY, IHYG, SHYL, FALN, IQHI, FSYD, and HYBL earn their yield from credit spread compensation. 

Sustainability is decent outside recessions, but these funds act like equity-sensitive credit. 

In drawdowns, correlations with stocks rise, so diversification versus equities is limited. 

They work best as income replacements for equities, not bonds.

Emerging-market high-yield bond ETFs like HYEM and EMHY add sovereign, FX, and geopolitical risk on top of credit spreads. They only modestly diversify equities.

The yield is sustainable only when global liquidity is supportive. 

Diversification can improve in calm regimes, but during stress these often underperform both US high yield and Treasuries.

Bank-loan and floating-rate funds including FLRT and TFLR provide income from senior secured, rate-resetting loans. 

These are reasonably diversifying. Note the near-zero correlation coefficient (though we’d expect it to correlate more with equities given enough time):

Asset Correlations

The SEC yields near 6.4%-6.6% do better against rate changes, which do better than duration-heavy bonds in rising rate environments. Credit stress remains the main risk.

Securitized and preferred exposure such as JBBB and PFXF sit between equity and debt.

These hybrid securities generally retain reasonably high correlations to both stocks and bonds. (As covered here, the lower the better it gets in a nonlinear way.)

CLO tranches and preferreds offer structural cash flows, but sit lower in the capital stack. 

They diversify interest-rate risk better than corporate bonds but are still nonetheless vulnerable in recessions.

Overall, this set is best viewed as credit carry, not defensive income.

6.23%-6.44% Yields

This set clusters around moderate high-yield credit, preferreds, and target-maturity structures, with SEC yields mostly 6.2%-6.4%. 

Core US high-yield bond ETFs like JNK, SJNK, SHYG, HYDB, GHYB, FLHY, and FDHY earn income from credit spreads. 

SJNK has a high Sortino ratio, but a high correlation to equities, which is normal for high-yield bonds:

Asset Correlations

Sustainability of HY credit is reasonable in stable growth periods. But they ultimately behave like equity-sensitive credit. 

Shorter-duration versions such as SJNK and SHYG reduce duration risk but not recession risk. 

Diversification versus equities is limited in stress.

Target-maturity high-yield ETFs including IBHI, BSJT, and BSJU add structure. 

Income is more predictable, with declining duration over time. 

They diversify rate risk better than perpetual funds but remain exposed to default cycles.

Preferred stock ETFs like PFF, SPFF, and PFFD sit lower in the capital stack. 

Yields are steady in calm conditions but vulnerable during periods of financial stress when dividends – which practically everyone owns them for, as capital appreciation is minimal – can be suspended. 

As covered with hybrid equity-credit above, they offer modest diversification.

EM high-yield exposure such as KHYB adds FX and regional risk. 

It tends to underperform sharply during global risk-off events.

Overall, this group is heavily about credit carry.

6.09%-6.21% Yields

This group sits around ~6.1%-6.2% SEC yield, but the underlying risk drivers vary meaningfully.

Bank-loan and floating-rate funds such as FTSL, BKLN, and BRLN generate income from senior secured, rate-resetting loans.

Yield sustainability is solid if defaults remain contained, and diversification versus duration-heavy bonds is strong. However, these remain credit-sensitive in recessions.

LTPZ is a Treasury inflation-linked bond fund, with a longer duration. It diversifies well to most things outside standard nominal bonds (e.g., note the high correlation to TLT below).

Asset Correlations

High-yield corporate bond ETFs including HYG, HYS, VSHY, THYF, SIHY, and ANGL earn income from credit spreads.

Shorter-duration versions reduce rate risk but still behave like equity-linked credit during downturns, limiting diversification benefits in stress.

Preferred stock exposure via PGX provides steady income in calm conditions but sits low in the capital stack. Dividends can be suspended during bad market periods, which makes it a hybrid equity-credit exposure.

Emerging-market debt such as PCY, LEMB, and ELD adds FX and sovereign risk. These can diversify in benign environments but tend to suffer when global liquidity tightens (e.g., note performance in 2022).

5.78%-6.09% Yields

This group centers on ~5.8%-6.1% SEC yields, but the income quality varies by structure.

High-yield corporate bond ETFs such as NUHY, PHYL, HYXF, GHYG, and CGMS generate income from credit spreads.

Sustainability is reasonable outside recessions, but these funds behave like equity-sensitive credit.

Preferred stock ETFs including JHPI, PGF, EPRF, and PSK are steady in calm periods but vulnerable to dividend suspensions in financial stress. They act as hybrid equity-credit exposures.

Bank loan exposure via LONZ offers floating-rate income with better protection against rising rates, though defaults rise in downturns.

Asset Correlations

Target-maturity high-yield funds like IBHH and IBHF give you more predictable income profiles with declining duration over time. But they remain exposed to credit cycles.

Emerging-market debt and equity income (EMLC, SDEM) add FX and geopolitical risk. (Full disclosure: I’ve been using EMLC in my own portfolio for many years.)

5.57%-5.75% Yields

This group clusters around ~5.6%-5.8% SEC yields.

High-yield corporate bond ETFs such as HYGH, HIYS, HYRM, and the BulletShares target-maturity fund BSJS earn income from credit spread carry.

Sustainability is reasonable outside recessions, but these remain equity-correlated credit. They offer limited diversification in drawdowns.

Rate-hedged versions like HYGH reduce duration risk, not default risk.

It has modest correlation to stocks:

Asset Correlations

Long-duration investment-grade bond ETFs including IGLB, SPLB, and VCLT deliver similar yields today, but this income is mostly rate-driven, rather than credit-driven.

VCLT is a longer-duration corporate bond fund that I personally use.

They diversify equity risk better, yet are highly sensitive to inflation and rate shocks – like in 2022.

Bank-loan and floating-rate exposure via PFRL gives you rate insulation through resetting coupons. Income is tied to short-term rates. Credit stress remains the key vulnerability.

Emerging-market debt funds such as VWOB, EBND, and EMHC add FX and sovereign risk.

Option-based income ETFs like KLIP and HYGW generate yield from volatility selling. Monetizing volatility provides differentiated cash flow but there’s the embedded downside risk in equity selloffs.

Overall, this set is income-heavy but not defensive.

5.30%-5.56% Yields

This group centers on ~5.3%-5.6% SEC yields, with differences driven by credit mix and duration, not yield level.

High-yield corporate bond ETFs such as HYBB, AHYB, PHB, IBHG, and FHYS earn income from credit spread carry.

These are equity-correlated credit, offering limited diversification during drawdowns.

Short-duration versions reduce rate risk, not default risk.

Multisector bond funds like CARY, NFLT, and OBND blend credit exposures to smooth income. This improves stability but there’s still credit-cycle risk.

Emerging-market bond ETFs, including JPMB, EMB, and GEMD add sovereign and FX risk.

Long-duration bonds (LKOR, ILTB) diversify equities better in a negative growth shock. But they introduce rate sensitivity that can backfire in environments like 2022 when inflation causes rates to rise faster than discounted, leading to a dual meltdown in both stock and bond prices.

5.11%-5.29% Yields

This set clusters around ~5.1%-5.3% SEC yields, but spans several distinct income engines.

High-yield corporate bond exposure such as IHY and the BulletShares target-maturity fund BSJR earns income from credit spreads. 

Sustainability is reasonable outside recessions, but these remain equity-sensitive credit and offer limited diversification during risk-off periods.

Emerging-market bond ETFs including EMBD and CEMB add sovereign risk. 

Securitized credit via CLOI and VABS provides income from floating-rate structured products. 

Note CLOI below, despite its relatively limited history:

Asset Correlations

These cash flows from securitized credit are less duration-sensitive and structurally different from corporate bonds.

Preferred stock exposure through PQDI gives better-than-bond yields but less-than-stock risks.

Long-duration bonds such as BLV and EDV deliver similar yields but with extreme rate sensitivity. Some like them as equity hedges but they work less well during inflation shocks.

Multisector and allocation funds like BYLD, MUSI, CGCP, and INKM smooth income through diversification rather than unique return sources.

BYLD uses quantitative screening to tilt toward higher-yielding bonds with favorable risk-adjusted characteristics. Accordingly, they rotate across sectors to maximize income while controlling duration and credit risk rather than relying on leverage.

Asset Correlations

Energy infrastructure (ENFR, MLPX) offers real-asset-linked cash flows with inflation sensitivity. But equity volatility is high.

4.97%-5.11% Yields

This group clusters around ~5.0%-5.1% SEC yields.

AAA CLO ETFs such as CLOA, ICLO, and JAAA generate income from senior CLO tranches with floating-rate coupons and structural credit protection.

Sustainability is high at these yield levels outside bad credit events.

Diversification versus traditional bonds is strong due to minimal duration risk.

Core-plus and corporate bond funds like TOTL, VBND, and PTBD earn yield from a mix of investment-grade credit and sector tilts. So you get smoother income but little true diversification beyond standard bond exposure.

High-yield bond exposure via HYDW offers lower-volatility credit carry, but it’s still equity-sensitive credit.

Preferred stock ETFs (FPFD, PRFD) give you stable income in calm markets but are still vulnerable in financial stress. Safer than stocks and higher yield than most bonds.

Long-duration Treasuries and STRIPS (GOVZ) give you equity hedging in a negative growth shock, but there’s extreme rate sensitivity. The price movements can often eat the nominal yield quickly.

Equity income and real asset funds (EFAS, DVYE, VRAI) give you yield through dividends, not contractual cash flows. So it adds equity volatility.