HYGH Profile
The iShares Interest Rate Hedged High Yield Bond ETF aims to provide investors with a strategic approach to high yield corporate bonds while mitigating interest rate risk. The fund seeks to closely track the performance of its underlying index, which is specifically designed to minimize the impact of interest rate fluctuations on a portfolio comprised of U.S. dollar-denominated high yield corporate bonds. This index provides exposure to high yield bonds but incorporates interest rate hedging mechanisms to address the risks associated with rising interest rates.
To achieve its objective, the fund allocates at least 80% of its net assets to securities and financial instruments that are constituents of the underlying index. This includes a diverse array of high yield corporate bonds, which are selected for their potential to deliver attractive income and capital appreciation. In addition to investing in these bonds, the fund employs interest rate hedging strategies to offset the sensitivity of the bond portfolio to interest rate movements, thereby reducing potential volatility in the face of changing interest rate environments.
The fund's investment strategy involves using derivative instruments such as interest rate swaps or futures contracts to hedge against interest rate risk. This approach allows investors to gain exposure to high yield bonds while attempting to shield the portfolio from the negative effects of rising interest rates. The use of such hedging techniques is designed to enhance the stability of the fund's returns and provide a more consistent investment experience, even during periods of fluctuating interest rates.
Managed by iShares, this ETF represents a sophisticated tool for investors seeking high yield exposure with a focus on interest rate risk management. By blending high yield bond investments with interest rate hedging, the fund aims to offer a balanced approach that addresses both income generation and interest rate sensitivity. Investors can benefit from the high yield bond market's income potential while mitigating some of the associated risks, making this ETF a strategic option for those navigating the complexities of the fixed income landscape.
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