(HYG) iShares High Yield - Ratings and Ratios

The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) is a popular exchange-traded fund designed to provide exposure to the U.S. high-yield corporate bond market. It tracks the performance of the iBoxx $ Liquid High Yield Corporate Bond Index, which is a rules-based index composed of U.S. dollar-denominated high-yield corporate bonds. These bonds are typically issued by companies with lower credit ratings, offering higher yields to compensate for the increased credit risk.

The fund invests at least 80% of its assets in the component securities of the underlying index, ensuring a high level of alignment with the indexs performance. Additionally, it allocates at least 90% of its assets to fixed income securities of the types included in the index. This approach allows the fund to maintain a focused portfolio while providing some flexibility for the advisor to select securities that best track the index. The funds advisor employs a sampling strategy, selecting a representative sample of securities from the index to achieve this objective.

With an assets under management (AUM) of approximately $14.4 billion, HYG is one of the largest and most liquid high-yield corporate bond ETFs available. It is listed on the NYSE Arca exchange, providing investors with easy access to the high-yield bond market. The fund is domiciled in the United States and is structured as an investment company, offering investors a convenient way to gain exposure to a diversified portfolio of high-yield bonds without directly purchasing individual securities.

Investors should note that high-yield bonds, while offering attractive yields, carry higher credit risk compared to investment-grade bonds. This means there is a greater likelihood of default by the issuers. Additionally, the funds performance can be sensitive to changes in interest rates, with prices of fixed-income securities generally declining as interest rates rise. As with any investment, it is important to evaluate your risk tolerance and investment objectives before investing in HYG or any other security.