Just a day after Vanguard launched their fixed income exchange traded funds (ETFs), competitor, Barclays Global Investors, introduced a high yield bond ETF. The iShares iBoxx $ High Yield Corporate Fund (HYG) is the latest fixed income ETF for investors, there are now 16 such ETFs available from Barclays and 4 from Vanguard.
According to the press release, the ETF is based on the iBoxx $ Liquid High Yield Index, which is rules-based,consisting of the most liquid and tradable U.S. dollar-denominated, high yield corporate bonds. The number of issues in the index is typically 50. High yield securities, also known as "junk bonds," include bonds rated lower than "BBB" by Standard & Poor’s and Fitch or "Baa3" by Moody’s. High yield products are considered riskier than other types of bonds or bond funds and they are not highly correlated to stocks.
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