iShares iBoxx $ High Yield Corporate Bond Fund (NYSE: HYG)
Originally recommended on Jan. 19/09 (IWB #2903) at US$75.99. Closed Friday at US$89.08. (All figures in U.S. dollars.)
There may be tough times looming for bond markets because of higher interest rates as the economy recovers but you wouldn't know it by the performance of this high-yield ETF. I originally recommended it almost exactly a year ago at $75.99. The shares closed on Friday at $89.08, which means we have a capital gain to date of 17.2%.
But that's just part of the story. We have also received monthly distributions of $8.31 which translates into a yield of 10.9% over the past 12 months. Combined with the capital gain, the total return to date is 28.2%. Not bad for a bond fund.
I don't expect anything like that kind of return in the next 12 months but the share price remains strong and the cash flow is excellent. The easy money has been made so I don't advise taking new positions but if you already have a stake here, hold on for now.
Action now: Hold.
Disclosure: Long HYG