Market Vectors ETF Trust announced today that it has launched its International High Yield Bond ETF (NYSE Arca: IHY), the first U.S. listed exchange-traded fund (ETF) designed to address a segment of the high-yield bond market that it believes, based on other funds currently available in the U.S. market, may be underrepresented in many investor portfolios.
“Our research has shown that for many investors the current allocation to corporate high-yield debt may miss as much as 35 percent of the global high-yield market,” said Edward Lopez, Market Vectors’ Marketing Director. “That underexposure may be especially important as international corporate high-yield bonds currently offer higher yields as well as historically lower default rates than similar debt instruments issued in the U.S. 1”
IHY seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of The BofA Merrill Lynch Global Ex-US Issuers High Yield Constrained Index (HXUS), which is comprised of below investment-grade debt issued by corporations located outside the U.S., which may include emerging market countries. The bonds are denominated in major global currencies, including Euros, U.S. dollars, Canadian dollars or British pound sterling, issued in the major domestic or Eurobond markets. As of March 27, 2012, the Index included 1,008 debt issues of 546 corporations located in 69 countries including a 33% allocation to emerging market bonds. Additionally, the index yield to worst of 8.3% was 1.2% higher than U.S. high-yield bonds, as represented by The BofA Merrill Lynch U.S. High Yield Master II Index.
“In today’s persistent low interest environment, investors continue to search the globe for new sources of income,” said Francis Rodilosso, one of the Fund’s Portfolio Managers. “With IHY, we have created an income-oriented ETF that, by tracking its index, may offer high-yield diversification, a high level of potential income and exposure to issuers worldwide that may experience more robust economic growth than the United States.”