Based on what Mr. Bernenke say today that interest rate will be kept low till at least mid of 2013, and that economic growth will likely be "frustratingly slow", and that Fed cut 2012 GDP to 2.5 - 2.9% from 3.3 - 3.7%, etc. Will JNK do well in the next 12 months?
If you have to ask that question then...Well, you did ask the question. JNK usually follows SPY in a more temperate form.
The risks for JNK are twofold: interest rate and default. Many think the default rate will be quite low in the near future. The interest rate risk is somewhat diminished because of the short duration (6-7 yrs). In short, JNK is not a completely safe investment. I think it's safer than stocks. However, junk tends to crash every 10 years or so-don't throw all your eggs in one basket.
If the economy grows sluggishly upward with low interest rates, JNK will do well, but probably not as well as SPY.
Dalila: Appreciate your response. You sound knowledgable about junk bonds, please write more in the future. I bought 500 shares at 40.3 a few months ago to collect the divy for long term supplemental income. Thanks again.