iShares iBoxx $ High Yield Corporate Bond ETF (HYG)HYG

US ETF iShares iBoxx $ High Yield Corporate Bond ETF: A Comprehensive Overview

Profile

Target Sector: Investment Grade and High Yield Corporate Bonds Asset Allocation: 85% High Yield, 15% Investment Grade Corporate Bonds Investment Strategy: Tracks the iBoxx $ High Yield 70% Capped Index

Objective

The primary objective of iShares iBoxx $ High Yield Corporate Bond ETF (HYG) is to deliver investment results that closely track the performance of the iBoxx $ High Yield 70% Capped Index (HYXC), net of expenses.

Issuer

Issuer: BlackRock, Inc. (BLK)

Reputation and Reliability: BlackRock is a leading global investment management company with a strong track record and reputation in the industry.

Management: The ETF is overseen by a team of experienced portfolio managers with expertise in fixed income investing.

Market Share

HYG is the largest USD High Yield Bond ETF globally, with a market share of approximately 37% as of November 2023.

Total Net Assets

HYG has approximately $17.5 billion in total net assets as of November 2023.

Moat

Competitive Advantages:

• Scale and Liquidity: HYG's large size provides investors with high liquidity and tight bid-ask spreads.
• Diversification: The ETF offers exposure to a broad range of high-yield corporate bonds across various sectors.
• Low Expense Ratio: HYG has a low expense ratio compared to other high-yield bond ETFs.

Financial Performance

Historical Performance: HYG has generated an average annualized return of 6.06% over the past 5 years, with a standard deviation of 10.16%.

Benchmark Comparison: HYG has outperformed its benchmark index, HYXC, over the past 5 years.

Growth Trajectory: The high-yield corporate bond market is expected to continue to grow in the coming years, driven by factors such as low-interest rates and increased demand for yield.

Liquidity

Average Daily Trading Volume: Approximately 15 million shares Bid-Ask Spread: 0.01%

Market Dynamics

Factors Affecting Market Environment:

• Interest Rates: HYG is sensitive to changes in interest rates. Rising interest rates can lead to a decrease in the value of the ETF.
• Economic Growth: The health of the US economy can impact the performance of high-yield corporate bonds.
• Defaults: An increase in defaults among high-yield companies can negatively affect the ETF's performance.

Competitors

• SPDR Bloomberg Barclays High Yield Bond ETF (JNK)
• Vanguard High-Yield Corporate Bond ETF (HYG)

Expense Ratio

0.48% per year

Investment Approach and Strategy

Strategy: Passively track the iBoxx $ High Yield 70% Capped Index Composition: The ETF primarily invests in US dollar-denominated high-yield and investment-grade corporate bonds.

Key Points

• Large and liquid ETF with low expense ratio.
• Diversified exposure to high-yield corporate bonds.
• Outperformed its benchmark index in recent years.

Risks

Volatility: HYG is a high-yield bond ETF and is therefore subject to volatility. Market Risk: The value of the ETF can be affected by changes in the market value of the underlying bonds. Credit Risk: There is a risk that the issuer of the bonds held by the ETF may default on their obligations.

Who Should Consider Investing

HYG is suitable for investors who:

• Are seeking high income potential.
• Have a moderate risk tolerance.
• Are looking for a diversified exposure to high-yield corporate bonds.

Fundamental Rating Based on AI

Rating: 8/10

HYG is a well-established and liquid ETF with a strong track record and a low expense ratio. The ETF is well-diversified and offers exposure to a broad range of high-yield corporate bonds. However, investors should be aware of the risks associated with high-yield bonds, such as volatility and credit risk.

Resources and Disclaimers

Sources:

• iShares Website: https://www.ishares.com/us/products/239683/ishares-iboxx-high-yield-corporate-bond-etf
• BlackRock Website: https://www.blackrock.com/
• Reuters: https://www.reuters.com/finance/stocks/ishares-iboxx-high-yield-corporate-bond-etf-hyg-nysearca-hyg

Disclaimer: The information provided in this report is for informational purposes only and should not be considered as investment advice. Investing involves risk, and the value of investments can fluctuate. Past performance is not indicative of future results.