Greetings,
I came across the high yield corporate debt family of ETFs, specifically BlackRock's $HYT fund. Has anyone traded/invested in these? Few questions:
They have almost an 8% dividend yield. What are the risks besides the risk on the borrowing firms defaulting, is it more around junk bonds not being a good investment in rising interest rates environments as we perhaps are now in 2016?
I believe these are classified as "tax-free" ETFs, what does that really imply?
I've always been confused about the expense ratio / management fee percentages listed on these fund prospectuses. I mean, if the fund is trading like a stock with it's own ticker, and is liquid wherein I see the price more every second, what is the importance of the management fee / expenses? Isn't it like, I buy at say $10, and I sell at $11, I make 10% realized gain, pre-tax?
Overall, what's the catch with investing in these funds?
Thanks much.
If you're looking for something conservative, then HY is probably the first thing you should avoid. Dividends above 3% should be probed into because there's usually a (negative) reason behind it; either there is little to no capital gains appreciation or the dividend is high because the asset/portfolio recently went to shit price-wise and now has a high dividend yield because of it. In the case of high-yield debt, some of that debt is very likely default and not offer any return on investment
Dignissimos iusto sapiente quia eos et autem. Corporis et cupiditate asperiores eius voluptate est quia. Aut iusto est consequuntur reprehenderit ut voluptas. Voluptas eum quam omnis necessitatibus similique. Voluptatem optio qui itaque molestias ullam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...