2024-07-15 16:26:37 ET
Summary
- ProShares High Yield—Interest Rate Hedged ETF effectively neutralizes interest rate risk in bond investing.
- The HYHG ETF combines high-yield bonds with an interest rate hedge, resulting in consistent yield and diversification across sectors.
- While advantageous in the past three years, HYHG may not be the ideal bond investment moving forward due to changing economic conditions and credit risk.
There are two primary risks broadly speaking when it comes to bond market investing. The first is credit risk, which is related to the risk of default. The second is interest rate risk, which is tied to monetary policy. This bear market we just had in bonds? It was entirely an interest rate-driven one. Credit risk, with hindsight, incredibly never rose. And guess what? There were ways to buy bond funds that neutralized that interest rate risk....
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For further details see:
HYHG: The Time Has Passed For Interest Rate Hedging High-Yield Bonds