Xtrackers USD High Yield Corporate Bond ETF (HYLB)
ARCA ARCA Primary Summary
HYLB Chart
HYLB: Not Among The Best Junk Bond ETFs
HYLB offers broad junk bond exposure with a 6%+ yield and a very low expense ratio. Despite slightly outperforming HYG, HYLB's share price and distributions have declined, especially after adjusting for inflation. For high-yield bond exposure, I prefer HYDB for better risk-adjusted returns or a fallen angels ETF for total return.
HYLB: Spreads Are Rising But The Market Is Still Too Optimistic
HYLB tracks the Solactive USD High Yield Corporates Total Market Index, reflecting U.S. high-yield corporate bonds. It is well-diversified with 1,200 holdings, mainly BB-rated, but exposed to economic shifts and higher default risks due to meaningful cyclical sector exposure. Current market conditions are discouraging when it comes to junk bond exposure.
The High-Yield Bond ETF HYLB Outshines Main Street Capital At 80% Premium
MAIN Street Capital's Q3 2024 results show a 10.8% gross assets yield and an 18.4% ROE, though the latter is debated due to variable gains. MAIN's future ROE may decline due to higher refinancing costs and lower floating-rate debt income, making its current premium to NAV questionable. Leveraged high-yield bond ETFs like HYLB and HYG offer comparable returns with lower risk and fees, challenging MAIN's attractiveness at an 80% premium.
Xtrackers USD High Yield Corporate Bond ETF (HYLB) FAQ
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Xtrackers USD High Yield Corporate Bond ETF Profile
| ARCA Exchange | US Country |
Overview
This fund is designed for investors looking for opportunities within the high yield corporate bond market, specifically targeting U.S. dollar-denominated securities. By committing at least 80% of its net assets, in addition to any funds borrowed for investment purposes, toward this financial instrument, the fund aims to offer its clientele a robust portfolio primarily constituted of high yield corporate bonds. An interesting characteristic of this fund is its strategic decision to potentially concentrate its investments significantly within a particular industry or group of industries. This investment approach is dependent on the targeted industry's representation in the underlying index, indicating a potential for specialized investment strategies within specific sectors.
Products and Services
- High Yield Corporate Bonds Investment:
The cornerstone of the fund's strategy revolves around investing heavily in high yield corporate bonds. These bonds, typically issued by entities that carry a higher risk of default compared to government securities and investment-grade corporate bonds, offer higher returns to compensate for the increased risk. The fund leverages this risk-return profile to potentially enhance portfolio gains.
- Index-Based Investment Strategy:
In its deployment of capital, the fund largely aligns with the makeup of its underlying index that is composed of U.S. dollar-denominated high yield corporate bonds. This method allows for a diversified approach, spreading risk across various issuers within the high yield sector, while striving to mirror the performance of its benchmark index.
- Industry Concentration:
To the extent that its underlying index exhibits a concentration in a particular industry or group of industries, the fund reserves the right to similarly concentrate its investments. This strategy can lead to greater exposure to the economic and market factors affecting those industries, offering both an opportunity for significant returns and a higher risk profile.
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