Over 83% of USHY’s holdings are rated BB or B. The ETF devotes nearly 13% of its weight to highly speculative CCC-rated bonds, but CCC-rated bonds have been among the best-performing issues in the high-yield space this year. Overall, USHY’s credit quality is slightly better than HYG’s.
“Over a longer time horizon, USHY has outperformed the narrower, liquidity screened high yield ETFs and indices. In times of elevated market volatility, however, HYG’s liquidity bias and relative up in quality composition has led to outperformance vs. USHY,” according to BlackRock.
Investors have added $78 million to USHY this year.
For more information on the fixed-income markets, visit our bond ETFs category.