Junk bonds are an important part of the financial food chain. They allow companies to raise capital for growth and expansion. Many of the companies that issue these bonds would be rejected by the traditional lending system. And, the majority of the companies that issue junk make good on their obligations. Like any other type of investment, diversification and selection becomes very important when putting your money into junk bonds.
Mutual funds are perhaps the easiest and safest way to invest in junk.
Just about every large family of funds has a junk portfolio. Of course, they don't call it that. Rising interest rates drive down the market value of all bonds. However, junk bonds are ultrasensitive to the economy. In an economic slowdown, it is most likely that financially fragile companies will be the first to fail.