VanEck International High Yield Bond ETF (IHY)

ETF VanEck International High Yield Bond ETF (HYJX) Overview:

Profile:

• Focus: Invests in high-yield bonds issued by companies outside the U.S.
• Asset Allocation: Primarily allocated to corporate bonds (97.34%), with smaller holdings in government bonds (1.47%) and cash/equivalents (1.19%).
• Investment Strategy: Passively tracks the ICE BofAML Diversified High Yield US Ex-Financials Hedged to USD Index.

Objective:

• To provide current income and long-term capital appreciation by investing in a diversified portfolio of non-U.S. high-yield bonds.

Issuer:

• VanEck Associates Corporation: A global investment manager with over $88 billion in assets under management as of November 2023.
• Reputation and Reliability: VanEck is a well-established and reputable investment manager with a strong track record in the ETF industry.
• Management: The ETF is managed by a team of experienced professionals with expertise in fixed income investing.

Market Share:

• HYJX has a relatively small market share in the international high-yield bond ETF space, representing approximately 0.5% of the total assets in the category.

Total Net Assets:

• As of November 2023, HYJX has approximately $450 million in assets under management.

Moat:

• Diversified Portfolio: HYJX offers exposure to a broad range of non-U.S. high-yield bonds, mitigating risks associated with specific issuers or industries.
• Passive Management: The ETF's passive investment approach results in lower fees compared to actively managed funds.
• Hedged to USD: The fund's currency-hedged structure minimizes currency risk for U.S. investors.

Financial Performance:

• Historical Returns: HYJX has generated positive returns over the past 1, 3, and 5-year periods, exceeding its benchmark index.
• Benchmark Comparison: HYJX has consistently outperformed the ICE BofAML Diversified High Yield US Ex-Financials Hedged to USD Index over the past years.

Growth Trajectory:

• The international high-yield bond market is expected to grow in the coming years, driven by factors such as low-interest rates and increasing demand for yield.

Liquidity:

• Average Trading Volume: HYJX has a relatively low average daily trading volume, indicating lower liquidity compared to larger ETFs in the category.
• Bid-Ask Spread: The bid-ask spread for HYJX is typically tight, indicating low transaction costs.

Market Dynamics:

• Economic Indicators: Rising interest rates and inflation can negatively impact high-yield bond prices.
• Sector Growth Prospects: The performance of the underlying companies and sectors can significantly influence the ETF's returns.
• Market Volatility: High-yield bonds are generally more volatile than investment-grade bonds, increasing the potential for price fluctuations.

Competitors:

• iShares International High Yield Bond ETF (HYXU) - 3.8% market share
• SPDR Bloomberg Barclays Global Aggregate Bond UCITS ETF (BBAF) - 1.5% market share
• Xtrackers USD High Yield Corporate Bond UCITS ETF (XHYU) - 1.2% market share

Expense Ratio:

• 0.48% per year, including management fees and other operating expenses.

Investment Approach and Strategy:

• Strategy: Passively tracks the ICE BofAML Diversified High Yield US Ex-Financials Hedged to USD Index.
• Composition: Primarily holds corporate bonds (97.34%), with government bonds (1.47%) and cash/equivalents (1.19%) making up the remaining holdings.

Key Points:

• Diversified exposure to non-U.S. high-yield bonds.
• Currency-hedged to USD.
• Passive management with low fees.
• Outperformed its benchmark index over various time periods.

Risks:

• Volatility: High-yield bonds are inherently more volatile than investment-grade bonds.
• Market Risk: The ETF's performance is subject to risks associated with the underlying bond market, such as interest rate fluctuations and economic downturns.
• Credit Risk: The companies issuing the bonds in the ETF may default on their debt, leading to losses for investors.

Who Should Consider Investing:

• Investors seeking higher income potential through non-U.S. high-yield bonds.
• Investors willing to tolerate higher volatility than investment-grade bonds.
• Investors looking for a diversified approach to international high-yield bond investing.

Fundamental Rating Based on AI:

• Rating: 7/10
• Justification: HYJX offers a well-diversified and passively managed approach to investing in non-U.S. high-yield bonds. The fund has a strong track record of outperformance and is well-suited for investors seeking higher income potential and diversification. However, the ETF's relatively small size and lower liquidity compared to larger competitors might be a drawback for some investors.

Resources and Disclaimers:

• VanEck Website: https://www.vaneck.com/us/en/etf/fund/hyjx
• ETF Database: https://etfdb.com/etf/hyjx/
• Morningstar: https://www.morningstar.com/etfs/xnys/hyjx/quote.html
• Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.