While the U.S. does command 45.8% of PGHY’s country weight, the fund does offer significant emerging markets exposure. Five of the fund’s top-10 country weights are developing markets – Russia, Ukraine, Brazil, Venezuela and Turkey. Those countries combine for over a third of PGHY’s weight. Other countries represented in the fund include France, Finland and Canada. [Rising Interest Rates Weigh on Emerging Markets Bond ETFs]
PGHY uses a sampling methodology, meaning it does hold all of the bonds featured in the DB Global Short Maturity High Yield Bond Index, the ETF’s underlying index. As of Friday’s close, PGHY held 37 dollar-denominated issues.
While high-yield bonds generally carry higher credit risk, these bonds and the ETFs that hold them are favored by investors for robust income streams. Some U.S.-focused corporate bond ETFs did decline during the June/early July rate spike, but those funds have recaptured nearly all of those losses. Additionally, narrowing spreads between U.S. high-yield corporate debt and Treasury indicate investors are relaxing fears regarding issuer default risk.
ETF Trends editorial team contributed to this article.