The iShares Broad USD High Yield Corporate Bond ETF (CboeBZX: USHY) is a year old and the diversified high-yield corporate bond exchange traded fund is celebrating its birthday in style. On Wednesday, BlackRock Inc. said USHY topped the $250 million in assets under management milestone.
To be precise, as of Oct. 30, USHY had $254.87 million in assets under management, according to issuer data. USHY targets the CE BofAML US High Yield Constrained Index.
BlackRock also offers the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG), the largest junk bond ETF. However, USHY includes exposure to over 1,600 securities from more than 900 different companies, compared with less than 1,000 issues in HYG from 2.5 times as many issuers at an even lower cost of 0.22%, compared to HYG’s 0.49% annual fee.
“HYG requires constituents to have a minimum of $1 billion outstanding in total debt and $400 million outstanding in a given issue while USHY requires no minimum total debt outstanding and a per issue minimum outstanding of only $250 million,” according to BlackRock.
More USHY ETF Details
USHY has an effective duration of 4.05 years, which is slightly higher than the 3.79 years on HYG. USHY’s option adjusted spread is 372. The fund has a 30-day SEC yield of 6.50%, or 43 basis points higher than the comparable yield on HYG.
Related: 6 Safe Bond ETFs to Park Your Money
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.