Buy iShares iBoxx High Yield Corporate Bond
What is HYG?
The iShares iBoxx High Yield Corporate Bond ETF was launched in April of 2007 to track the investment results of an index comprising U.S.-dollar denominated high-yield corporate bonds.
Among the most widely used vehicles to replicate the high-yield sector, HYG covers a broad range of income-generating companies, some 1,250 of them. About one-third of the holdings carry maturities of 3 to 5 years. More than half (55%) are rated BB by Standard & Poor’s.
As an exchange-traded fund, HYG trades like a stock. Performance-wise it tends to behave like a risk-asset, moving in correlation with the swings of the stock market.
It has $25.7 billion in assets (as of October) making it the largest ETF in this asset category. Among HYG’s top holdings are blue-chip companies that have fallen below investment grade. These include Ford Motor Company, Sprint Corporation and Caesar’s Entertainment.
What is the price of HYG?
At roughly $87 per share (as of early December 2020), HYG is up 3.4% since the start of the year. It’s up 5% since inception.
With equities rallying in the second half of 2020, high-yield corporate bonds followed suit, having the best performance within the wider fixed-income realm; high-yield funds overall saw $1 billion in inflows during November 2020.
Most online brokerages offer the ETF at zero commission. BlackRock collects an annual 0.49% management fee, or $49 per $10,000.
In a world where institutional investors are ravenous for yield, the prices on high yield corporate bond ETFs like HYG are near historic highs but could revert to historic levels longer term.
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This article is for informational purposes only and takes no account of particular personal or market circumstances, and should not be relied upon as investment, tax, or legal advice. For investment, tax, or legal advice, and before taking any action you should consult your own advisors. Note that assets such as equities present unique risks for investors.
This content is correct as of November 2020
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