SCYB Profile
The Schwab High Yield Bond ETF is strategically designed to provide investors with exposure to a diversified portfolio of high-yield corporate bonds. The fund focuses on U.S.-denominated, fixed coupon-bearing bonds that are rated below investment grade, typically referred to as "junk" bonds. These securities are selected for their higher yield potential, offering a chance to earn greater returns compared to investment-grade bonds. The ETF includes bonds with at least one year remaining to maturity, thereby targeting shorter-duration high-yield investments.
The fund tracks an index that applies a cap of 2% per issuer, ensuring diversification across multiple issuers while potentially including an unlimited number of bond issues. This structure helps mitigate issuer-specific risk while capturing opportunities across various high-yield sectors. The index encompasses corporate bonds from countries within the FX-G10, which includes major economies such as the Eurozone, the United States, the United Kingdom, Canada, Australia, New Zealand, Switzerland, Norway, Sweden, and Japan.
In addition to traditional high-yield bonds, the ETF may invest in callable perpetual bonds and fixed-to-floating rate securities, which can provide additional income and flexibility. Up to 20% of the fund’s portfolio may consist of highly liquid securities issued by the U.S. government, providing a buffer against market volatility and enhancing liquidity. The ETF also utilizes derivatives, such as futures contracts, to manage interest rate risk and adjust the fund’s duration profile.
The Schwab High Yield Bond ETF is rebalanced on a monthly basis to ensure that its holdings accurately reflect the current market conditions and maintain alignment with the index. This approach allows the fund to respond to changes in the high-yield bond market and adjust its exposure accordingly. Investors in this ETF can benefit from a blend of high yield and relative stability, positioning their portfolios to potentially achieve higher returns in exchange for accepting higher credit risk.
|
