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Is WisdomTree U.S. High Yield Corporate Bond ETF (WFHY) a Strong ETF Right Now?
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Launched on 04/27/2016, the WisdomTree U.S. High Yield Corporate Bond ETF is a smart beta exchange traded fund offering broad exposure to the High-Yield/Junk Bond ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $223.35 million, making it one of the average sized ETFs in the High-Yield/Junk Bond ETFs. This particular fund seeks to match the performance of the WisdomTree Fundamental U.S. High Yield Corporate Bond Index before fees and expenses.
The WisdomTree U.S. High Yield Corporate Bond Index is a rule-based alternatively weighted Index designed to capture the performance of selected issuers in the U.S. high yield corporate bond market that are deemed to have attractive fundamental and income characteristics.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for WFHY are 0.38%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 6.40%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
When you look at individual holdings, Us Dollar accounts for about 2.59% of the fund's total assets, followed by Organon Finance 1 Llc 5.125% 4/30/2031 and Crescent Energy Finance 7.25% 5/1/2026.
Its top 10 holdings account for approximately 8.78% of WFHY's total assets under management.
Performance and Risk
The ETF return is roughly 0.97% and is up about 7.69% so far this year and in the past one year (as of 06/11/2024), respectively. WFHY has traded between $42.17 and $45.77 during this last 52-week period.
The ETF has a beta of 0.48 and standard deviation of 8.85% for the trailing three-year period. With about 480 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. High Yield Corporate Bond ETF is not a suitable option for investors seeking to outperform the High-Yield/Junk Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares Broad USD High Yield Corporate Bond ETF (USHY - Free Report) tracks BofA Merrill Lynch U.S. High Yield Constrained Index and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index. IShares Broad USD High Yield Corporate Bond ETF has $12.65 billion in assets, iShares iBoxx $ High Yield Corporate Bond ETF has $17.81 billion. USHY has an expense ratio of 0.08% and HYG charges 0.49%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the High-Yield/Junk Bond ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is WisdomTree U.S. High Yield Corporate Bond ETF (WFHY) a Strong ETF Right Now?
Launched on 04/27/2016, the WisdomTree U.S. High Yield Corporate Bond ETF is a smart beta exchange traded fund offering broad exposure to the High-Yield/Junk Bond ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $223.35 million, making it one of the average sized ETFs in the High-Yield/Junk Bond ETFs. This particular fund seeks to match the performance of the WisdomTree Fundamental U.S. High Yield Corporate Bond Index before fees and expenses.
The WisdomTree U.S. High Yield Corporate Bond Index is a rule-based alternatively weighted Index designed to capture the performance of selected issuers in the U.S. high yield corporate bond market that are deemed to have attractive fundamental and income characteristics.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for WFHY are 0.38%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 6.40%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
When you look at individual holdings, Us Dollar accounts for about 2.59% of the fund's total assets, followed by Organon Finance 1 Llc 5.125% 4/30/2031 and Crescent Energy Finance 7.25% 5/1/2026.
Its top 10 holdings account for approximately 8.78% of WFHY's total assets under management.
Performance and Risk
The ETF return is roughly 0.97% and is up about 7.69% so far this year and in the past one year (as of 06/11/2024), respectively. WFHY has traded between $42.17 and $45.77 during this last 52-week period.
The ETF has a beta of 0.48 and standard deviation of 8.85% for the trailing three-year period. With about 480 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. High Yield Corporate Bond ETF is not a suitable option for investors seeking to outperform the High-Yield/Junk Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares Broad USD High Yield Corporate Bond ETF (USHY - Free Report) tracks BofA Merrill Lynch U.S. High Yield Constrained Index and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index. IShares Broad USD High Yield Corporate Bond ETF has $12.65 billion in assets, iShares iBoxx $ High Yield Corporate Bond ETF has $17.81 billion. USHY has an expense ratio of 0.08% and HYG charges 0.49%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the High-Yield/Junk Bond ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.