HYG Stock Recent News

The iShares iBoxx $ High Yield Corporate Bond ETF is the largest "junk bond" ETF. The PIMCO 0-5 Year High Yield Corporate Bond Index ETF has better return data but seems to have a higher risk portfolio. Both ETFs are reviewed in depth and then compared. My conclusion: it is a toss-up as to which is the better ETF to hold short-term and/or long-term.

The U.S. interest rate environment is highly uncertain and though we might see lower interest rates in late 2024, there's no way to be sure.. Although I hold a specific view of interest rates, many might disagree.

Federal Reserve hikes have led to sharply higher rates across fixed-income asset classes. High-yield bonds and senior loans offer particularly attractive yields, in the 7.5% - 10.5% range. Yields are much higher than in the past, and when compared to equities.

High-yield, or “junk,” bonds outperformed in a turbulent April for financial assets, showing surprising resilience despite a sharp spike in volatility in benchmark borrowing rates.

Default rates for high-yield bonds are rising, reaching 4.5% in December 2023. Credit spreads for high-yield bonds are narrowing and currently below historical averages. Risk-adjusted returns for high-yield bonds are weak, treasuries look stronger in this regard.

Some of the larger, more well-known ETFs have significant drawbacks and stronger peers. These include HYG, BIL, and MORT. A quick explanation of the shortcomings of these ETFs, and some stronger alternatives, follows.

Consider hedging with 3–5 year Treasuries, or housing stocks. Option-adjusted high-yield spreads are near all-time lows. Junk bonds are almost as exposed to refinancing risk as much maligned commercial real estate debt.

In the first quarter of 2024, fixed income investors turned to investment-grade corporate bond ETFs. The Vanguard Intermediate-Term Corporate Bond ETF (VCIT) pulled in $2.3 billion, while the Vanguard Long-Term Corporate Bond ETF (VCLT) added $1.5 billion.

As we start a new month, quarter, and week, I want to remind you how I concluded the weekend Daily: “Narratives are not very meaningful if price says something different. We have seen narratives change on a dime as price rules.

The iShares iBoxx $ High Yield Corporate Bond ETF has delivered strong returns in 2023 despite concerns about rising corporate defaults. HYG's strong performance was driven by tightening credit spreads, which are trading near all-time lows. However, all-time low credit spreads do not reflect reality, as actual defaults continue to increase. This signals potential risks for the HYG ETF.