ProShares Ultra High Yield (UJB)

ETF ProShares Ultra High Yield (HYG) Summary

Profile: ProShares Ultra High Yield (HYG) is an exchange-traded fund (ETF) that aims to provide investors with 2x the daily performance of the Markit iBoxx USD Liquid High Yield Index. This index tracks the performance of high-yield corporate bonds issued in the US dollar market.

Objective: The primary investment goal of HYG is to offer investors a magnified exposure to the high-yield bond market with the potential for amplified returns.

Issuer:

• Name: ProShares
• Reputation and Reliability: ProShares is a well-established ETF issuer with a reputation for offering innovative and diversified investment products. It is a subsidiary of ProFunds Group, which itself is a subsidiary of the publicly traded company Invesco Ltd. (IVZ).
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in fixed income markets.

Market Share: HYG is the largest ETF in the high-yield bond sector, with a market share of approximately 40%.

Total Net Assets: As of October 27, 2023, HYG has approximately $26 billion in total net assets.

Moat: HYG's main competitive advantage is its size and liquidity, which allows it to offer investors a low expense ratio and tight bid-ask spreads. Additionally, its focus on a specific index provides investors with a transparent and rules-based exposure to the high-yield bond market.

Financial Performance: HYG has historically outperformed its benchmark index, providing investors with amplified returns. However, it is important to note that the ETF is more volatile than the underlying index due to its use of leverage.

• Benchmark Comparison: HYG has outperformed the Markit iBoxx USD Liquid High Yield Index by an average of 1.5% per year over the past five years.
• Historical Performance: HYG has delivered a total return of over 100% since its inception in 2007.

Growth Trajectory: The high-yield bond market is expected to continue to grow in the coming years, which could benefit HYG. However, it is important to note that the market is subject to fluctuations in interest rates and economic conditions.

Liquidity:

• Average Trading Volume: HYG has an average daily trading volume of over 10 million shares.
• Bid-Ask Spread: The bid-ask spread for HYG is typically around 0.05%.

Market Dynamics: The high-yield bond market is affected by a variety of factors, including interest rates, economic growth, and corporate creditworthiness.

Competitors: Key competitors of HYG include:

• iShares iBoxx $ High Yield Corporate Bond ETF (HYG) - 39.6% market share
• SPDR Bloomberg Barclays High Yield Bond ETF (JNK) - 25.1% market share
• VanEck Merk High Yield Bond ETF (HYLB) - 4.9% market share

Expense Ratio: HYG has an expense ratio of 0.45%.

Investment Approach and Strategy:

• Strategy: HYG seeks to track the performance of the Markit iBoxx USD Liquid High Yield Index.
• Composition: The ETF invests in a diversified portfolio of high-yield corporate bonds.

Key Points:

• Large and liquid ETF with a low expense ratio.
• Provides magnified exposure to the high-yield bond market.
• Historically outperformed its benchmark index.
• Subject to higher volatility than the underlying index.

Risks:

• Volatility: HYG is more volatile than the underlying index due to its use of leverage.
• Market Risk: The high-yield bond market is subject to fluctuations in interest rates and economic conditions.
• Credit Risk: The ETF invests in bonds issued by companies with lower credit ratings, which increases the risk of default.

Who Should Consider Investing: HYG is suitable for investors who are seeking to:

• Gain exposure to the high-yield bond market.
• Amplify their returns.
• Are comfortable with higher volatility.

Fundamental Rating Based on AI: 7.5/10

HYG receives a 7.5/10 rating based on its strong financial performance, market position, and growth trajectory. However, the ETF's high volatility and exposure to credit risk are important considerations for investors.

Resources:

• ProShares Ultra High Yield ETF website: https://www.proshares.com/funds/hyg.html
• Markit iBoxx USD Liquid High Yield Index: https://www.markit.com/en/products/indices/fixed-income/ibx-usd-liquid-high-yield-index.html

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a financial professional before making any investment decisions.