The index’s sector breakdown includes communications 21.2%, consumer non-cyclical 17.3%, energy 15.8%, consumer cyclical 12.8%, industrial 6.6%, technology 4.6%, basic materials 3.6%, diversified 0.1%, financials 13.1% and utilities 4.7%.
The current environment favors high-yield debt because slow economic growth has historically supported high-yield bonds, a healthy corporate credit environment and loan defaults are at historical lows.
The Market Vectors ETF will be competing against the recently launched First Trust High Yield Long/Short ETF (NasdaqGM: HYLS), an actively managed ETF that holds U.S. and non-U.S. corporate debt, bank loans and convertible bonds, with both long and short positions. Additionally, the fund can take short positions in U.S. Treasuries or investment grade corporate debt. [First Trust Launches Active High-Yield ETF]
Additionally, the ProShares High Yield Interest Rate Hedged ETF is waiting on regulatory approval.
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Max Chen contributed to this article.
Story updated to correct the holdings of THHY.