HYDB: Optimistically Backing High-Yield Corporate Bonds

Summary

  • Softening credit spreads raises the appeal of non-investment grade corporate bonds.
  • The BlackRock Institutional Trust Company N.A. - iShares High Yield Bond Factor ETF provides exposure to companies still on a post-pandemic recovery course.
  • Moderating inflation and lower credit spreads mean cyclical companies in the BBB region could outperform investment-grade corporate and default-free government bonds.
  • BlackRock Institutional Trust Company N.A. - iShares High Yield Bond Factor ETF's monthly dividend distributions allow for favorable compounding. Moreover, the ETF serves easy and affordable access to the U.S. Bond market.

Increased interest rates. Bond coupons, yields and positiv changes in basis points.

Torsten Asmus

We might get a reasonable amount of flak for this article, as many investors fear a recession, and concurrently are staying away from high-yield bonds. However, credit spreads are narrowing, and the equity market is receiving substantial support. Thus, we believe the

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This article was written by

Pearl Gray is a proprietary investment fund and independent market research firm specialising in systematic analysis.Our latest work on SA primarily covers: Bonds, Preferreds, REITs, with an occasional drift.Primary Sectors: Financials and Real Estate.Mission: To discover actionable total return ideas at the nexus of rigorous academic theories, practical experience, and common sense.Kindly note that our published content is dispensed as Independent Analysis and Doesn't Constitute Financial Advice. For any content-related concerns, contact our Head of Research: Steve Booyens, CFA or leave a message in the comments section.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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