A Highly Liquid, High-Yield Bond ETF Option

The DWS high-yield bond ETF is quickly becoming a stable in fixed-income investors’ search for speculative-grade debt exposure.

The Xtrackers USD High Yield Corporate Bond ETF (HYLB) has accumulated $1.2 billion in net assets under management. The fund comes with a relatively cheap 0.20% expense ratio, shows a 5.75% 12-month yield and trades an average 157,000 shares per day.

“We recently crossed the threshold of $1 billion dollars in assets under management, and our average daily volume is over 40 million dollars per day. We’ve also seen clients regularly trade much more than that average daily volume, proving the liquidity story. Our spreads have even come in between one and two cents on average, and we’ve also seen options get listed on the product. That gives HYLB the full liquidity profile you would expect from a major ETF,” Luke Oliver, Head of ETF Capital Markets at DWS, said on a video.

HYLB tries to reflect the performance of the Solactive USD High Yield Corporate Total Market Index, a market value weighted benchmark designed to mirror the performance of high yield corporate bonds issued in U.S. dollars.

For those investors seeking pure high-yield beta exposure as part of their diversification strategy in their overall asset allocation strategy, they can diversify with something like HYLB. In the extended low interest rate environment, high-yield bonds provide investors with a potential source of income. While the market is anticipating an interest-rate hike by the US Federal Reserve Board, the high-yield market tends to be less impacted by rate moves, shielding investors from potential volatility or providing a yield cushion should the market pull back.

For more information on the speculative-grade debt market, visit our junk bonds category.