Meanwhile we acknowledge credit risks remain prevalent, but the 61 global corporate defaults year-to-date tallied by S&P Global Ratings are lower than in recent years. According to CFRA Research, iShares iBoxx High Yield Corporate Bond ETF (HYG), and high-yield ETF peer SPDR Bloomberg Barclays High Yield Bond (JNK) provided similar credit exposure, with approximately 47% of assets rated BB and 5% rated BBB.
However, there are other ways to gain high-yield exposure. For example iShares Edge High Yield Defensive Bond (HYDB) screens based on quality and value factors, more common in the smart-beta equity ETF world. HYDB launched in 2017 and has just $17 million in assets, considerably less than HYG and JNK.
In rating fixed income ETFs, CFRA combines this holdings-level analysis with fund attributes including the ETF’s liquidity, expense ratio and bid/ask spread. Reports can be found on MarketScope Advisor.
Todd Rosenbluth is Director of ETF & Mutual Fund Research at CFRA.