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WisdomTree’s HYZD targets high yield with rate hedging
The WisdomTree Interest Rate Hedged High Yield Bond ETF has an effective duration of 0.22 years and holds about 65% of its portfolio in BB rated bonds.
ETF Trends highlights WisdomTree Interest Rate Hedged High Yield Bond Fund, ticker HYZD, as a high-yield bond ETF designed to reduce exposure to interest rate swings through hedging. The fund is sized at $273.7 million and is described as having an effective duration of 0.22 years.
The article notes that HYZD also aims to address credit risk by leaning toward higher quality, BB spectrum junk rated corporate bonds, with nearly 65% of holdings in that range. WisdomTree fixed income director Behnood Noei said underlying high yield credit fundamentals remain solid despite volatility, citing default rates at 1.9%, leverage broadly stable at 4.5x, and interest coverage above 4x.
ETF Trends adds that the fund’s approach reflects a tougher credit backdrop, with lenders becoming more selective for lower-quality issuers. Noei also argued that broad, passive high yield exposure is no longer sufficient as the Fed’s path remains uncertain, emphasizing the importance of identifying stronger issuers.