ETFOptimize | High-performance ETF-based Investment Strategies

Quantitative strategies, Wall Street-caliber research, and insightful market analysis since 1998.


ETFOptimize | HOME
Close Window

1 ETF That Stands to Benefit From Dovish Fed Signals

Amid favorable inflation data for October and November, interest rate hikes are expected to slow down eventually. As the bonds market is witnessing an uptrend, iShares iBoxx $ High Yield Corporate Bond (HYG) could be a wise investment. Keep reading…

iShares iBoxx $ High Yield Corporate Bond ETF (HYG) represents the U.S. dollar-denominated high-yield liquid corporate bond market. With the rebounding bond market, it could be a solid investment for investors looking to secure their portfolios against potential stock market volatility.

Global bonds rebounded in November 2022, adding a record $2.80 trillion in market value. Amid favorable inflation data in October and November, the Fed is expected to slow down its rate hike aggression and has sent dovish signals.

Moreover, Omar Slim, a fixed-income portfolio manager at PineBridge Investments in Singapore, said, “We are starting to see a number of economic indicators that point to the fact that inflation has peaked or is peaking.”

Furthermore, Goldman Sachs Group (GS) expects the bond market to fare well in 2023. The bank expects the bond market to even become less risky in 2023.

HYG has lost marginally over the past month and 14.5% in 2022 to close the last trading session at $74.39. However, it has gained 3.1% over the past three months.

Here is what could shape HYG’s performance in the near term:

Impressive Fund Stats

HYG has assets under management of $17.48 billion. The fund has net inflows of $6.09 billion over the past three months and $4.09 billion over the past six months. It has a beta of 0.42 and a NAV of $74.09.

Top Holdings

The fund has a total of 1210 holdings. Its principal holdings include U.S. Dollar with a 0.52% weighting, followed by TransDigm, Inc. 6.25% 15-MAR-2026 with a 0.50% weighting, and Mozart Debt Merger Sub, Inc. 3.875% 01-APR-2029 with a 0.43% weighting.

Attractive Dividend

HYG pays an annual dividend of $3.90 which yields 5.25% at the current share price. Its four-year average yield is 4.92%.

POWR Ratings Reflect Promising Prospects

HYG’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

HYG has a Trade grade of A and a Buy & Hold grade of B. In the 58-ETF High Yield Bond ETFs group, it is ranked #17.

Click here to see the POWR Ratings for HYG.

View all the top ETFs in the High Yield Bond ETFs group here.

Bottom Line

HYG pays a hefty dividend. Moreover, amid dovish Fed signals and declining inflation expectations, the bond market is expected to thrive in the near term. Given the backdrop, HYG might be an ideal buy now.

How Does iShares iBoxx $ High Yield Corporate Bond ETF (HYG) Stack up Against Its Peers?

While HYG has an overall POWR Rating of B, one might consider looking at its peers with an A (Strong Buy) rating: iShares 0-5 Year High Yield Corporate Bond ETF (SHYG), SPDR Blackstone Senior Loan ETF (SRLN), and Invesco Senior Loan ETF (BKLN).


HYG shares were trading at $74.19 per share on Tuesday morning, down $0.20 (-0.27%). Year-to-date, HYG has declined -10.31%, versus a -18.10% rise in the benchmark S&P 500 index during the same period.



About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

More...

The post 1 ETF That Stands to Benefit From Dovish Fed Signals appeared first on StockNews.com
Stock Quote API & Stock News API supplied by www.cloudquote.io
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms Of Service.


 

IntelligentValue Home
Close Window

DISCLAIMER

All content herein is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor should it be interpreted as a recommendation to buy, hold or sell (short or otherwise) any security.  All opinions, analyses, and information included herein are based on sources believed to be reliable, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. We undertake no obligation to update such opinions, analysis or information. You should independently verify all information contained on this website. Some information is based on analysis of past performance or hypothetical performance results, which have inherent limitations. We make no representation that any particular equity or strategy will or is likely to achieve profits or losses similar to those shown. Shareholders, employees, writers, contractors, and affiliates associated with ETFOptimize.com may have ownership positions in the securities that are mentioned. If you are not sure if ETFs, algorithmic investing, or a particular investment is right for you, you are urged to consult with a Registered Investment Advisor (RIA). Neither this website nor anyone associated with producing its content are Registered Investment Advisors, and no attempt is made herein to substitute for personalized, professional investment advice. Neither ETFOptimize.com, Global Alpha Investments, Inc., nor its employees, service providers, associates, or affiliates are responsible for any investment losses you may incur as a result of using the information provided herein. Remember that past investment returns may not be indicative of future returns.

Copyright © 1998-2017 ETFOptimize.com, a publication of Optimized Investments, Inc. All rights reserved.