Importantly, WFHY’s index methodology has helped that benchmark avoid half the corporate defaults seen in the U.S. this year.
“The WisdomTree Index uses a combination of factors to identify bonds with favorable risk/reward in high yield. Step one of the process is to exclude issuers that do not have publicly traded equities and thus may not report public financials. In our view, these companies are under less scrutiny to manage a healthy balance sheet. This approach has helped our Index avoid nine defaults so far this year,” according to WisdomTree.
WFHY is outperforming the largest junk bond ETF by 160 basis points this year.
For more information on the bond market, please visit our Fixed Income Channel.