However, yield-starved investors who are interested in the junk bond space but are wary of further credit risks among energy producers may consider a recently launched high-yield, ex-energy bond ETF, the iShares iBoxx $ High Yield ex Oil & Gas Corporate Bond ETF (NasdaqGM: HYXE). HYXE basically tracks the same group of debt securities as HYG except it does not hold exposure to energy companies.
Specifically, HYXE includes a 28.3% positions toward the communications sector, 14.7% consumer non-cyclical, 14.6 consumer cyclical, 9.5% capital goods, 8.7% tech, 7.0% basic industry, 5.3% finance, 3.4% electric, 3.4% banking, 1.3% transportation and 1.2% to other industrials.
HYXE shows a 3.97 year effective duration, or sensitivity to changes in interest rates, while HYG has a 3.82 year duration.
However, since it excludes the higher yielding energy sector, HYXE comes with a slightly lower 4.94% 30-day SEC yield, compared to HYG’s 5.55% 30-day SEC yield. The lower yield, though, comes with peace of mind in knowing that one is not exposed to a riskier segment of the speculative-grade debt market.
For more information on the speculative-grade debt market, visit our junk bonds category.