Examining Negative Duration and Rate-Hedged ETFs | Page 2 of 9 | ETF Trends

Market Vectors Treasury-Hedged High Yield Bond ETF (NYSEArca: THHY)

30-Day SEC Yield: 4.96%

Effective Duration: 0.23 years

Comment: THHY provides another option to access high-yield, junk bonds. The fund’s underlying index 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.

THHY holds short positions in U.S. Treasuries, which has weighed on the ETF’s performance this year, but the reverse should be true if rates rise. The ETF has 91 holdings, nearly half of which are rated BB.