Another option to consider is the Market Vectors Treasury-Hedged High Yield Bond ETF (NYSEArca: THHY), which employs a type of long/short strategy where it will go long junk bonds and short 5-year Treasury bonds to hedge against adverse movements in interest rates.
Due to that Treasury-hedging methodology, 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%. [Treasury Hedged ETFs for Rising Rates]
Rodilosso pointed to THHY as a vehicle for investors concerned about rising interest rates but who are less concerned about the credit cycle.
Market Vectors Treasury-Hedged High Yield Bond ETF Credit Quality
Table Courtesy: Market Vectors
Tom Lydon’s clients own shares of HYG and JNK.