Demand for yield is a condition not lost on ETF issuers and new products were issued and assets in these categories have grown substantially. We'll investigate some, not all, of the top issues in both these sectors.
Let's look at typical and more popular choices.
HYG (iShares iBoxx High Yield Bond ETF) tracks the index of the iBoxx High Yield Index. It's been a big money maker for iShares given the fee of .50%. The current yield is near 7.75% and one year return is over 18% which enhances the "you get what you pay for" theme. AUM (Assets under Management) are just shy of $9B and average daily trading volume is just over 1M shares. As demand increases for both ETFs and mutual funds, supply considerations become more difficult to deal with for all sponsors. Over 40% of holdings are rated B and the average duration is less than 10 years.
Data as of June 2011 HYG Top Ten Holdings & Weightings
- Citigroup 7%: 1.15%
- Lyondell Chemical 11%: 0.94%
- HCA 9.25%: 0.87%
- First Data 12.625%: 0.83%
- Citigroup 7%: 0.82%
- Intelsat Bermuda 11.25%: 0.76%
- Texas Competitive Electric 11.5%: 0.72%
- Springleaf Financial 6.9%: 0.72%
- CHS Community Health 8.875%: 0.71%
- Energy Future Inter Holdings 10%: 0.64%
- Citigroup 7%: 3.51%
- Lyondell Chemical 11%: 1.73%
- First Data 144A 12.625%: 1.51%
- Harrah's Operations 10%: 1.43%
- Intelsat Bermuda 11.25%: 1.41%
- Energy Future International Holdings 10%: 1.12%
- Wind Acquisition Financial 11.75%: 1.09%
- Clear Channel Holdings 9.25%: 1.04%
- Residential Capital Corp 9.625%: 1.01%
- FMG Resources PTY 7%: 0.99%