Investors who want to profit from the higher interest payments that high-yield bonds provide while mitigating some risk via diversification may invest in exchange-traded funds comprising a basket of high-yield bonds (ETFs). They should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy.
The United States is home to 43 exchange-traded funds (ETFs) specializing in high-yield bonds. This number does not include inverse or leveraged ETFs, nor does it include funds with an AUM of less than $50 million (AUM). As measured by the Bloomberg U.S. Corporate High Yield. These are simply for informational purposes and should not be considered individual investment advice or recommendations. We cannot guarantee that it is accurate or comprehensive. This indicates that high-yield bonds have underperformed the broader market.
ETF Traded By Ishares That Hedges Interest Rates On High Yield Bonds (HYGH)
- 4.2 percent performance throughout a year
- Expense Ratio: 0.52 percent
- 4.15 percent on an annual basis as a dividend yield
- 14,458 transactions per day on average during the last three months
- Assets Under Management: $152.1 million
- May 27, 2014, is the date of conception.
- BlackRock Financial Management is the entity that is the issuer.
This is designed to reduce the exposure to interest rate risk associated with holding a portfolio of high-yield corporate bonds denominated in U.S. dollars. One of the purposes of the fund is to manage the risk of fluctuating interest rates, and another goal is to adjust to shifting credit spreads in the financial markets. The holdings of the ETF are nearly completely made up of the iShares iBoxx $ High Yield Corporate Bond ETF (HYG), which makes up 96.1 percent of the portfolio of the HYGH. The remaining 3.9 percentage points are mostly comprised of interest rate swaps.
As a result, the performance of HYGH is intricately connected to the performance of HYG. HYG's most important investments are bonds issued by the telecommunications business Sprint Corp. Fund for Investment in High-Yield Securities with a Value-Scoring from FlexShares (HYGV)
- 3.7 percent performance throughout a year
- Expense Ratio: 0.37 percent
- 5.98 percent on an annual basis as a dividend yield
- Assets Under Management: $688.8 billion Three-Month Average Daily Volume: 120,053 Volumes Traded
- Date of Beginning Operations: July 17, 2018
- Issued by: Northern Trust Corporation
The Northern Trust High Yield Value-Scored U.S. Corporate Bond Index is the benchmark that HYGV follows. The index comprises high yield bonds denominated in U.S. dollars and is issued by firms chosen for their basic merits, market values, and liquidity. More than 85 percent of assets are comprised of bonds issued by firms located in the United States. However, the fund also includes the best bond issued by corporations based in Canada, France, the United Kingdom, and several other countries. Within the realm of high yield, HYGV places an emphasis not only on the diversification of income but also on the value and quality of the issuers of debt.
Investors' interest income from muni bonds is often exempt from taxation. Even while many of these bands have received investment-grade ratings from the various rating agencies, which indicates a relatively low degree of credit risk, this does not mean that they are risk-free. By owning debt issued by various state governments, local governments, and agencies, an exchange-traded fund that invests in municipal bonds may assist in decreasing risk. Concerns about increasing interest rates and inflation led investors to pull $4.8 billion from municipal bond funds during the first week of April. This was the highest withdrawal from municipal bond funds since 2020. However, some municipal bonds have grown increasingly appealing to investors recently
The Proshares High Yield-Interest Rate Hedged Exchange Traded Fund (HYHG)
- Performance over the Past Year: 3.6 Percentage Points
- Expense Ratio: 0.51 percent
- The dividend yield for the year is 5.03 percent
- 21,130 Transactions Per Day On Average over Three Months
- Assets Under Management: $142.7 million
- Date of Establishment: May 21, 2013
- ProShares is the issuer
Because of its short position, HYHG can reduce the negative effects of increasing interest rates. The portfolio contains high-yield debt from three industries: industrial services, industrial manufacturing, and industrial energy. This makes up more than three-quarters of the total holdings in the portfolio. The comments, opinions, and analyses expressed here are only informational. They should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. These are simply for informational purposes and should not be considered individual investment advice or recommendations. We have a good faith belief that the material presented here is credible; nonetheless, we cannot guarantee that it is accurate or comprehensive.
