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Holding high-yield ETFs like HYG, JNK, REM in taxable accounts can cost you thousands in taxes.

Market News
28 Aug 2026
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High-yield ETFs such as iShares iBoxx $ High Yield Corporate Bond ETF (HYG), SPDR Bloomberg High Yield Bond ETF (JNK), and iShares Mortgage Real Estate ETF (REM) distribute income taxed as ordinary income, which can reach up to 37% for high earners. When held in taxable brokerage accounts, the after-tax yield is significantly lower than if held in tax-advantaged accounts like IRAs or 401(k)s. These ETFs pay interest and dividends that do not qualify for lower capital gains tax rates, making account choice crucial to maximize returns. Investors should prefer holding these funds in Traditional IRAs, Roth IRAs, or 401(k)s to avoid heavy taxation on income distributions.

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