SCYB - SCYB: Not The Time For High Yield
2025-05-04 12:57:00 ET
Summary
- Inflation post-Covid has driven demand for high-yield investments like the Schwab High Yield Bond ETF (SCYB), which boasts a 7.88% yield and low expense ratio.
- SCYB's balanced duration profile and strong performance have attracted over $1 billion in assets, despite ongoing macroeconomic concerns and interest rate uncertainties.
- The fund's portfolio includes a significant portion of BB and B-rated bonds, raising concerns about the risk-reward balance given current tight credit spreads.
- While SCYB is a solid, low-cost option for high-yield exposure, caution is advised due to potential risks in the high-yield bond market.
I talk to a lot of individual traders and investors from all walks of life, and nearly everyone I talk to has the same overarching worry: having enough income. Inflation post-Covid has resulted in a mad dash for anything that generates yield, and unlike years prior, there clearly is a lot more of it given how much the Fed has raised rates. And it’s worked. Many high yielding, riskier investments have performed quite well in recent years (certainly better than “safe” government bonds). One fund that’s been proof of that is the Schwab High Yield Bond ETF ( SCYB ). Since its debut in July 2023, this ETF has gathered more than $1 billion in managed assets. With over 1,700 holdings, and a 30-Day SEC Yield of 7.88%, one can see why there’s been some real interest in the fund as a core bond allocation....
SCYB: Not The Time For High Yield