This ETF offers exposure to junk bonds from developed markets outside the U.S., an asset class that has the potential to deliver significant returns but that is often underweighted or excluded entirely from investor portfolios. Because many broad-based bond ETFs focus on dollar-denominated investment grade debt, junk bonds often get little allocation in long-term portfolios. Moreover, the ETFs in the High Yield Bonds ETFdb Category focus primarily on junk bonds of U.S.-based issuers. As a result, HYXI offers a way to add securities that may bring both return enhancement and diversification benefits to a bond portfolio. HYXU could be used as a long term holding with a moderate weighting, or more as a tactical tool when junk bond yields are appealing.
It should be noted that HYXU focuses on developed markets outside the U.S., and may have a heavy tilt towards issuers in Canada and Western Europe (with little allocation afforded to developed Asian economies). Within those regions, however, the portfolio is well balanced across country and industry.
HYXU is more expensive than ETFs focusing exclusively on U.S. debt, but still very affordable given the type of exposure offered through the underlying portfolio.