Published Thu, 09 Jul 2020 12:24:29 -0400 on Seeking Alpha
Seeking AlphaETF AnalysisiShares Broad USD High Yield Corporate Bond ETF: A High-Yield Fund With Potential Equity-Like ReturnsJul. 9, 2020 12:24 PM ET|| About: iShares Trust - iShares Broad USD High Yield Corporate Bond ETF (USHY)by: Michael A. Gayed, CFAMichael A. Gayed, CFA The Lead-Lag ReportAnticipate Corrections and Volatility with Award Winning ResearchSummaryiShares Broad USD High Yield Corporate Bond ETF is a fund comprising of high-yield corporate bonds denominated in USD.
The fund has been able to maintain its dividend payout since inception and is a good source of returns for investors.
It is a highly diversified fund but credit risk continues to be significant given the current economic scenario.
If companies don't know that they can run out of money, they won't be thinking of ways not to run out of money. – Bill Gross
The capital markets are in a frenzy as the liquidity pumped in by the Fed has helped in the recovery of equity and debt markets. Some of the debt funds are performing particularly well as the rates have fallen considerably. The high-yield segment of the bond market has drawn the attention of late after the Fed went into a buying spree. The iShares Broad USD High Yield Corporate Bond ETF (USHY) is a fund that tracks this segment and has a comprehensive list of investments in its portfolio. The high-yield bond market has attracted investors who are looking for alternatives to equity investment with higher yield, and with the new Fed mandate to buy Junk bonds, somewhat lower bound-constrained.
How has the buyout from the Fed has helped? Prior to the announcement by the Fed that it would be purchasing this asset class, investors were pulling out their money from the high-yield debt market. The latter half of February and the entire March month saw net outflows. Unsurprisingly, the tide seemed to change after the Fed got involved, and there have been continuous inflows every week since the announcement.
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