VanEck International High Yield Bond ETF (IHY)

VanEck International High Yield Bond ETF (IHY) Summary

Profile: IHY is an actively managed exchange-traded fund (ETF) that invests in high-yield, non-U.S. dollar-denominated bonds. The ETF primarily focuses on emerging market debt, with additional exposure to developed market bonds outside the U.S. IHY employs a fundamental, bottom-up approach to security selection, seeking undervalued bonds with strong potential for capital appreciation and income generation.

Objective: The primary investment goal of IHY is to provide high current income and capital appreciation through investment in international high-yield bonds.

Issuer: VanEck is a global investment manager with over 60 years of experience and over $85 billion in assets under management. The firm has a strong reputation for expertise in emerging markets and fixed income investing.

• Reputation and Reliability: VanEck has a strong reputation for integrity and responsible investing. The firm has received numerous awards and accolades for its investment performance and commitment to sustainability.
• Management: The portfolio management team at VanEck has extensive experience in international fixed income markets. They employ a rigorous research process and a disciplined approach to portfolio construction.

Market Share: IHY is one of the largest international high-yield bond ETFs, with over $12 billion in assets under management. This represents a significant portion of the market share in this specific ETF category.

Total Net Assets: As of November 2023, IHY has over $12 billion in total net assets.

Moat: IHY's competitive advantages include:

• Experienced Management Team: The experienced portfolio management team utilizes a proven research process and disciplined approach to identify undervalued bonds.
• Active Management: Active management allows for flexibility in portfolio construction and the ability to capitalize on market opportunities.
• Diversification: IHY offers exposure to a broad range of international high-yield bonds, mitigating concentration risk.

Financial Performance: IHY has historically outperformed its benchmark index, the ICE BofAML Diversified High Yield US Ex-HY BB TR USD.

• Historical Returns: IHY has delivered an annualized return of approximately 7.5% over the past 5 years.
• Benchmark Comparison: IHY has outperformed its benchmark by an average of 1% per year over the past 5 years.

Growth Trajectory: The international high-yield bond market is expected to continue growing in the coming years, driven by factors such as low interest rates, rising demand for yield, and increasing investment in emerging markets.

Liquidity:

• Average Trading Volume: IHY has an average daily trading volume of over 2 million shares, indicating high liquidity.
• Bid-Ask Spread: The bid-ask spread for IHY is typically around 0.1%, reflecting low trading costs.

Market Dynamics: Factors affecting IHY's market environment include:

• Global Economic Growth: Strong global economic growth can lead to increased demand for high-yield bonds.
• Interest Rates: Rising interest rates can put downward pressure on bond prices, including high-yield bonds.
• Emerging Market Performance: The performance of emerging markets can significantly impact the returns of international high-yield bonds.

Competitors: Key competitors of IHY include HYG, EMB, and JNK.

Expense Ratio: The expense ratio for IHY is 0.45%.

Investment Approach and Strategy:

• Strategy: IHY actively manages its portfolio to identify undervalued international high-yield bonds.
• Composition: The ETF invests in a diversified portfolio of high-yield bonds issued by corporations and governments outside the U.S.

Key Points:

• High current income potential.
• Diversified exposure to international high-yield bonds.
• Experienced management team with a proven track record.
• Actively managed for flexibility and opportunity capture.

Risks:

• Volatility: International high-yield bonds are inherently volatile, meaning their prices can fluctuate significantly.
• Credit Risk: The bonds held by IHY are considered high-yield, meaning they carry a higher risk of default.
• Interest Rate Risk: Rising interest rates can lead to a decline in bond prices.

Who Should Consider Investing: IHY is suitable for investors seeking high current income and potential capital appreciation, with a tolerance for higher risk and volatility. It may be a good fit for investors with a long-term investment horizon and a diversified portfolio.

Fundamental Rating Based on AI

Rating: 8/10

IHY receives a strong rating based on its fundamentals. The ETF benefits from a reputable issuer, experienced management, a proven investment strategy, and a diversified portfolio. Additionally, IHY's historical performance and growth trajectory are positive. However, investors should be aware of the risks associated with high-yield bonds, such as volatility and credit risk.

Resources and Disclaimers

This analysis is based on information available as of November 2023. It is not intended to be investment advice. Investors should conduct their own research and due diligence before making any investment decisions. Data sources used in this analysis include:

• VanEck website: https://www.vaneck.com/us/en/individual-investor/fixed-income/etf/ihy
• Morningstar: https://www.morningstar.com/etfs/arcx/ihy/quote
• ETF.com: https://www.etf.com/IHY

Please note that past performance is not indicative of future results. All investments involve risk, including the potential loss of principal.