USHY Stock Recent News

iShares Broad USD High Yield Corporate Bond ETF is the largest high-yield corporate bond ETF in the market. It yields 6.6% and has performed reasonably well since inception. USHY is a solid income ETF and one without significant advantages or disadvantages to high-yield peers.

iShares Broad USD High Yield Corporate Bond ETF is the largest “junk bond” ETF, based on assets under management. The USHY ETF has an attractive yield, but its price has suffered a 12% decay since 2017 and distributions have not kept pace with inflation. USHY has a very cheap fee and outperformed most competitors, but it lags “fallen angels” funds.

iShares Broad USD High Yield Corporate Bond ETF has performed well with 3-year rates falling in the last 6 months and declining credit spreads. However, we strongly agree with lower credit spreads, particularly as the soft landing narrative becomes questioned. An inverted yield curve might already be accounting for associated rate declines on possibly worsening economic conditions with upcoming maturity walls.

The largest high yield bond ETFs have been out of favor for much of 2024. However, many advisors recently told VettaFi they think the style will perform best going forward.

The ETF USHY is a preferred investment solution compared to its competitors, as high-yield bonds have historically maintained their value. The current yields of the ETF present a low-risk premium, despite the default risk of junk bonds remaining essentially stable (expected to be 4.74% for December 2024). However, the ETF has always demonstrated a great ability to preserve capital.

iShares Broad USD High Yield Corporate Bond ETF has a broad diversification and decent performance compared to peers, but mid-term outlook is not appealing. Current credit spreads suggest high-yield bonds are priced optimistically, despite worsening economic data. Investors should proceed with caution and be aware of risks when investing in USHY and similar high-yield bond ETFs.

Credit spreads are abnormally tight, indicating a potential risk of a credit event in the bond market. The iShares Broad USD High Yield Corporate Bond ETF may not be the best choice for investors due to the potential credit event. USHY offers a higher yield compared to other high yield bond ETFs, but carries significant risks. Investors should carefully consider these risks before investing.

Goldman Sachs predicts an increase in domestic high-yield defaults, followed by a retreat in the second half of next year. In August, corporate defaults reached the highest level since 2009, while corporate buybacks were down 20.4% in Q2. The iShares Broad USD High Yield Corporate Bond ETF offers a high yield-to-maturity compared to the S&P 500, but credit spreads remain modest.

USHY's implied credit spread for its higher yield portfolio is in line with the broader market, but where historically spreads are low in the face of a recession. This seems to mean that the market believes that the inflation is mostly supply side and that current rates aren't that high above healthy neutral rates. While we tend to agree with aspects of this idea, USHY has no upside if markets are wrong, so we're not interested.

Despite a banking crisis and volatile oil prices, the domestic high-yield market hasn't made big moves this year. I see balanced risks with USHY as we head into a positive stretch on the calendar.