HYHG, the ProShares offering, is proof investors will consider hedging rate risk while staying long junk bonds. The ETF debuted in May 2013, but at the end of the second quarter had nearly $152 million in assets, according to issuer data.
HYHG has a 30-day SEC yield of almost 4.7% and an effective duration of just 0.16 years. The ETF tracks the the Citi High Yield (Treasury Rate-Hedged) Index.
“We see a number of factors that tell us we’re not currently in a bubble for high yield. For example, the effects of the recent high yield sell-off have been almost completely retraced and the fundamentals, like issuance, corporate leverage levels, and default rates, remain relatively strong,” said Market Vectors Portfolio Manager Fran Rodilosso in a statement last week.
Due to its Treasury-hedging methodology, THHY has a scant effective duration of 0.21 years. The ETF has a yield to worst of 4.39% and a 30-day SEC yield of 4.25%. Rodilosso pointed to THHY as a vehicle for investors concerned about rising interest rates but who are less concerned about the credit cycle. [Two ETFs to Keep You in the High Yield Game]
ProShares High Yield-Interest Rate Hedged ETF
