Rydex High Yield Strategy Fund Class C (RYHHX)

Overview

The fund is designed to offer investors exposure to the high yield bond markets of the U.S. and Canada by investing a minimum of 80% of its net assets, as well as any borrowings made for investment purposes, in financial instruments that closely replicate the economic characteristics of the high yield bond markets. Instead of directly investing in high yield bonds, the fund strategically utilizes a variety of financial derivative instruments, such as credit default swaps, swaps on ETFs (Exchange-Traded Funds), and bond futures. This approach allows the fund to simulate exposure to the desired markets. Operating as a non-diversified fund, it places a significant emphasis on a select group of investments rather than spreading its investments across a wide array of securities.

Products and Services

• Credit Default Swaps (CDS)

  A type of financial derivative that the fund invests in, Credit Default Swaps provide the fund with exposure to the credit risk associated with high yield bonds without the need to own the underlying bonds. Through CDS, the fund aims to gain from the insurance-like protection sellers provide against default of a borrower, mirroring the performance of owning actual high yield debt securities.

• Swaps on ETFs

  Investment in swaps on ETFs enables the fund to achieve exposure to the broader high yield bond market without directly purchasing the ETFs. These swaps are agreements to exchange the returns of an ETF, which tracks the high yield bond market, with another party. This method provides the fund with a flexible and efficient way to replicate the performance of the high yield bond market indices.

• Bond Futures

  Bond futures are standardized contracts to buy or sell a particular bond at a specified price on a future date. By investing in bond futures, the fund can hedge against market volatility and interest rate movements in the high yield bond market. This instrument offers the advantage of leveraging, as the fund can control a large amount of underlying high yield bonds for a relatively small amount of capital, amplifying both potential gains and losses.