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For investors seeking momentum, ProShares High Yield—Interest Rate Hedged ETF HYHG is probably on the radar. The fund just hit a 52-week high and has gained 6.6% from its 52-week low of $61.49 per share.
ProShares High Yield—Interest Rate Hedged ETF effectively neutralizes interest rate risk in bond investing. The HYHG ETF combines high-yield bonds with an interest rate hedge, resulting in consistent yield and diversification across sectors. While advantageous in the past three years, HYHG may not be the ideal bond investment moving forward due to changing economic conditions and credit risk.
ProShares High Yield-Interest Rate Hedged ETF is a fixed-income ETF that hedges against rising interest rates. HYHG has outperformed other high-yield bond ETFs due to its elimination of the negative impact of rising rates via treasury futures short positions. As rates are expected to decrease in the future, switching to other ETFs with higher duration profiles will generate higher total returns.
The ProShares High Yield-Interest Rate Hedged ETF provides exposure to an interest-rate hedged portfolio of high yield bonds. The HYHG ETF has delivered strong near-term performance but long-term returns are more modest and are driven by changes in credit spreads. Investors should wait for wider than average high yield credit spreads before buying the HYHG ETF due to their mean-reverting nature.
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