- Joshua M Brown
- April 16th, 2012
iShares celebrates the fifth anniversary of a fund that was highly controversial upon its introduction...
Wednesday April 11th marked the 5 year anniversary of when HYG began trading. When we launched HYG (the iShares iBoxx High Yield Fund) five years ago, a number of investors were skeptical. The lack of liquidity in the high yield bond space made it an asset class no ETF had dared to enter before. A Seeking Alpha article at the time declared the fund was “effectively an experiment that can only be judged over time.”
Fast forward five years and HYG is now one of the largest high yield bond funds (including mutual funds) in the United States, with over $14.4 billion in assets under management. HYG has effectively changed how investors look at and invest in the high yield market, giving them an intra-day indicator of what the high yield market is doing.
Perhaps most remarkably, the concerns about liquidity turned out to be unfounded as HYG actually became a source of liquidity that hadn’t existed before.
I've used the security here in there in several types of portfolios over the years and it's generally done its job and served its purpose. If I'm right about the next few years, corporate debt will become increasingly important for retirement portfolios and within that space, high yield debt can certainly have its place.
Keep reading below for more on HYG's first five years and the state of the bond ETF.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.