Fixed Income: U.S. - Corporate High Yield Short-Term

HYS Top Performer Intra-day
Price $101.39
Today’s Change +0.16%(0.16)
4:00pm 09/22/2017
HYND Bottom Performer Intra-day
Price $20.55
Today’s Change -0.09%(-0.45)
1:23pm 09/22/2017
  • Overview
  • Efficiency
  • Tradability
  • Fit

ETF.com Insight

As investors continue their hunt for yield, the US short-term high yield segment continues to attract assets. Two broad-market funds have over $1B in AUM each. Despite the growth of theHYS is the largest and most liquid fund segment, institutional liquidity is relatively weak here, so block trades will need to be worked hard with liquidity providers.
HYS is one of the two largest and most liquid funds in the segment, but it also has the segment's highest cost (55 bps) by a fairly wide margin. For that elevated cost, you get a neutral take on the market with significant variability in tracking.
Despite entering the segment later than HYS, SJNK has attracted almost $4B in AUM on the back of a segment-low expense ratio. However, the fund has struggled on a median basis to track its index over the past 24 months, but it Fits the market best—it tracks our benchmark. Despite its struggle in tracking, SJNK is our Analyst Pick because its liquidity, low fees and market-like exposure.
Guggenheim's BulletShares suite–target-date funds–aims to provide investors with a specific maturity date. BSJF, BSJG and BSJH are scheduled to mature in December of 2015, 2016 and 2017, respectively. They appear to be on course with their planned path.
SHYG, HYZD and HYND were launched in the last quarter of 2013. SHYG is the shorter-term sister of iShares' HYG. HYZD and HYND by WisdomTree track essentially the same index as HYS in their long portfolios but overlaid with interest rate-hedging strategies. HYZD and HYND offer investors options to maintain overall short-term high yield exposure while reducing their portfolio duration. (Insight updated 09/22/17)

All Funds (9)

SHYG $3.33 B 3327933000 Lower YTM

B 84
E
90
90
T
84
84
F
84
84

SJNK $4.42 B 4415977534.5 Marketlike

C 97
E
78
78
T
74
74
F
97
97

HYS $1.79 B 1793063500 Highly liquid

C 81
E
71
71
T
74
74
F
81
81

BSJJ $861.42 M 861420000 Matures in 2019

C 74
E
72
72
T
73
73
F
74
74

BSJI $1.08 B 1084166800 Matures in 2018

C 51
E
77
77
T
73
73
F
51
51

HYZD $55.42 M 55424940 Credit risk only

D 62
E
69
69
T
62
62
F
62
62

HYND $16.58 M 16580800 Significant Duration Risk

F 48
E
60
60
T
26
26
F
48
48

SFHY $5.12 M 5123842.4748 N/A

N/A 0
E
0
-1
T
0
-1
F
0
-1

BSJF $450.45 M 450450000 Matures in 2015

C 30
E
80
80
T
71
71
F
30
30

ETF.com Grade as 09/14/17

Fixed Income: U.S. - Corporate High Yield Short-Term

Performance  [as of 09/21/17] 1 Month 3 Month YTD 1 Year 3 Years 5 Years 10 Years
Benchmark: Bloomberg Barclays US High Yield 350M Cash Pay 0-5Y 2% Capped Index--------------
B 83.931793SHYG3327933000SHYGiShares 0-5 Year High Yield Corporate Bond ETF0.90%1.70%4.56%7.16%3.79%----
C 96.600009SJNK4415977534.5SJNKSPDR Bloomberg Barclays Short Term High Yield Bond ETF0.83%1.61%3.98%6.56%2.73%3.67%--
C 80.736207HYS1793063500HYSPIMCO 0-5 Year High Yield Corporate Bond Index ETF0.91%1.85%4.91%8.00%4.22%4.89%--
C 73.796903BSJJ861420000BSJJGuggenheim BulletShares 2019 High Yield Corporate Bond ETF0.73%1.62%5.19%7.29%3.09%----
C 51.38909BSJI1084166800BSJIGuggenheim BulletShares 2018 High Yield Corporate Bond ETF0.73%0.88%2.90%4.21%2.41%4.13%--
D 62.273277HYZD55424940HYZDWisdomTree Interest Rate Hedged High Yield Bond Fund0.94%1.66%4.66%9.59%3.69%----
F 47.991569HYND16580800HYNDWisdomTree BofA Merrill Lynch High Yield Bond Negative Duration Fund1.39%1.54%-0.89%11.05%0.35%----
N/A 0SFHY5123842.4748SFHYWisdomTree Fundamental U.S. Short-Term High Yield Corporate Bond0.92%0.06%1.37%1.85%------
C 30.0172735BSJF450450000BSJFGuggenheim BulletShares 2015 High Yield Corporate Bond-0.02%-0.55%1.64%1.58%2.68%----
All returns over 1 year are annualized. All returns are total returns unless otherwise stated.

ETF.com Efficiency Insight

No broad market fund scores particularly well here, highlighting the challenge of effectively optimizing passive junk bond portfolios, especially since the underlying market is generallyNo fund scores particularly well here illiquid and volatile.
Despite having the segment's highest expense ratio (55 bps), HYS scores among the highest in Efficiency in the segment. It also beat SJNK in tracking performance on a median basis but both have shown more tracking volatility than we would like. Tracking volatilities are rather common in the high yield market, largely due to portfolio optimization and liquidity constraints in the underlying market.
SJNK charges the lowest headline expense ratio. However, its "low" expense ratio has not helped its tracking performance. The fund has lagged its index by more than twice its expense ratio over most rolling 12-month periods over the past 2 years.
Two newer funds—HYZD and HYND—have yet to accumulate enough data for a full tracking performance evaluation. Nonetheless, we expect similar struggles in tracking their respective indexes.
As assets grow, all three target date funds have improved their tracking significantly. They are on track to be unwound on their planned liquidation dates.
HYZD and—in particular—HYND haven't gathered enough assets to ensure their future viability. All other funds in the segment have sufficient asset bases to ensure a low likelihood of closure for any reason other than planned liquidations. (Insight updated 09/22/17)

All Funds (9)

90
89.638618
78
78.192391
77
76.790589
72
71.810676
71
71.056609
69
69.259339
60
60.191045
N/A
0
80
80.410153087942

ETF.com Grade as 09/14/17

Fixed Income: U.S. - Corporate High Yield Short-Term

Tracking Difference (12 Month)

Ticker Expense Ratio Median Max. Upside Max. Downside Max LT/ST Cap Gains Rate Rule Legal Structure Fund Closure Risk Efficiency
BSJI Guggenheim BulletShares 2018 High Yield Corporate Bond ETF 0.43% -1.40% -0.47% -2.71% 20.00% / 39.60% Low 76.790589
BSJJ Guggenheim BulletShares 2019 High Yield Corporate Bond ETF 0.43% -1.74% -0.10% -4.07% 20.00% / 39.60% Low 71.810676
HYND WisdomTree BofA Merrill Lynch High Yield Bond Negative Duration Fund 0.48% -2.65% -1.49% -4.91% 20.00% / 39.60% High 60.191045
HYS PIMCO 0-5 Year High Yield Corporate Bond Index ETF 0.55% -1.31% -0.24% -2.99% 20.00% / 39.60% Low 71.056609
HYZD WisdomTree Interest Rate Hedged High Yield Bond Fund 0.43% -1.67% -0.03% -3.23% 20.00% / 39.60% Medium 69.259339
SHYG iShares 0-5 Year High Yield Corporate Bond ETF 0.30% -0.44% -0.12% -0.62% 20.00% / 39.60% Low 89.638618
SJNK SPDR Bloomberg Barclays Short Term High Yield Bond ETF 0.40% -0.97% -0.18% -1.85% 20.00% / 39.60% Low 78.192391
SFHY WisdomTree Fundamental U.S. Short-Term High Yield Corporate Bond 0.38% -- -- -- 20.00% / 39.60% High 0
BSJF Guggenheim BulletShares 2015 High Yield Corporate Bond -0.92% -0.15% -1.22% 20.00% / 39.60% Low 80.410153087942

ETF.com Tradability Insight

Except for the two newest funds (HYZD and HYND), retail investors can trade all short-term junk bond funds with relative ease. SJNK and HYS, the two largest offerings, attract at least $30Mhigh yield market is illiquid in general each in daily volume with very tight spreads.
BSJF, BSJG and BSJH—target-date funds—typically see steady volumes and manageable spreads. Furthermore, buy and hold investors purchasing them effectively cut their already muted spreads in half by holding to maturity.
SHYG is also accessible at reasonable spreads for retail investors using limit orders.
Since the high yield market is illiquid in general, multiple creations/redemptions will likely move the prices of underlying securities against you. In short, work with a liquidity provider, but don't expect a bargain on execution costs. (Insight updated 09/22/17)

All Funds (9)

84
84.080663
74
74.398756
74
73.821038
73
73.368048
73
73.016288
62
62.265037
26
25.515825
N/A
0
71
71.3098804

ETF.com Grade as 09/14/17

Fixed Income: U.S. - Corporate High Yield Short-Term

Ticker Median Daily Volume ($) Average Spread Creation Unit/Day Market Hours Overlap Underlying Volume/Unit % Creation Cost Per Unit (%) Impediment to Creations Score - Tradability
BSJI Guggenheim BulletShares 2018 High Yield Corporate Bond ETF $3.46 M 0.06% 1.37 100.00% -- 0.02% None 73.368048
BSJJ Guggenheim BulletShares 2019 High Yield Corporate Bond ETF $3.52 M 0.08% 1.43 100.00% 0.01% 0.02% None 73.016288
HYND WisdomTree BofA Merrill Lynch High Yield Bond Negative Duration Fund $34.19 K 0.64% 0.02 100.00% -- 0.02% None 25.515825
HYS PIMCO 0-5 Year High Yield Corporate Bond Index ETF $18.22 M 0.05% 3.61 100.00% 80.97% 0.01% None 73.821038
HYZD WisdomTree Interest Rate Hedged High Yield Bond Fund $342.13 K 0.27% 0.14 100.00% -- 0.02% None 62.265037
SHYG iShares 0-5 Year High Yield Corporate Bond ETF $20.56 M 0.02% 4.30 100.00% -- 0.00% None 84.080663
SJNK SPDR Bloomberg Barclays Short Term High Yield Bond ETF $27.82 M 0.04% 3.33 100.00% 12.06% 0.01% None 74.398756
SFHY WisdomTree Fundamental U.S. Short-Term High Yield Corporate Bond $0 0.41% 0.00 100.00% -- 0.00% None 0
BSJF Guggenheim BulletShares 2015 High Yield Corporate Bond $1.36 M 0.52 100.00% -- 0.02% None 71.3098804

ETF.com/ Block Liquidity

HYZD
5
4
3
2
1
SHYG
5
4
3
2
1
BSJI
5
4
3
2
1
BSJJ
5
4
3
2
1
HYS
5
4
3
2
1
SJNK
5
4
3
2
1
HYND
5
4
3
2
1
SFHY
5
4
3
2
1
BSJF
5
4
3
2
1

This measurement shows how easy it is to trade 25,000 shares of each ETF.

ETF.com Fit Insight

[Insight as of 11/28/14] The segment can be broken down into three general groups of exposure: Broad market short-term, target-date, and duration-hedged.
SJNK is the standout in Fit,SJNK is the standout in Fit registering a near-perfect score thanks to the fund tracking the same index as our benchmark. SJNK mirrors our benchmark across all maturity buckets, with roughly 2/3 of the portfolio maturing 3-5 years from now and about 1/4 of the portfolio in bonds expiring in 1-3 years. HYS leans toward the shorter term, over 40% of the portfolio will mature in less than 3 years.
Whereas SJNK and HYS attempt to provide perpetual exposure to the broad short-term, high-yield market, BSJF, BSJG and BSJH aim to provide targeted exposure consistent with their target date mandate. They behave more like individual bonds rather than typical bond funds. As time passes, their maturities and durations will decline until their planned liquidation dates.
HYZD and HYND were launched as part of the rate-hedged suite by WisdomTree. Their long portfolios track essentially the same index as HYS but overlaid with an interest rate hedging strategy through Treasury futures. HYZD aims for net duration of zero with the intent of capturing only the credit spread while minimizing duration risk. On the other hand, HYND aims for a net duration of -7 years. Investors can add HYND to their core high yield holdings to shorten up duration without substantially altering underlying credit and sector exposures. (Insight updated 09/22/17)

All Funds (9)

97
96.600009
84
83.931793
81
80.736207
74
73.796903
62
62.273277
51
51.38909
48
47.991569
N/A
0
30
30.0172735

ETF.com Grade as 09/14/17

Fixed Income: U.S. - Corporate High Yield Short-Term