The BKHY ETF is managed by a well-established issuer BNY Mellon with a reputation for expertise in the fixed-income market. This issuer employs a systematic investment strategy focused on high-yield bonds and seeks to replicate the performance of the Bloomberg US Corporate High Yield Total Return Index. With a commitment to providing exposure to the high-yield bond market, the issuer typically invests substantially all, if not at least 80%, of the ETF's assets in bonds that meet the index's criteria. Additionally, the issuer may utilize derivatives such as credit default swap indexes, total return swaps, structured notes, and futures to achieve its investment objectives. The Bloomberg US Corporate High Yield Total Return Index, used as a benchmark, is carefully designed to measure the performance of U.S. dollar-denominated, high-yield, fixed-rate, taxable corporate bonds, with specific criteria for inclusion. The issuer's dedication to maintaining the ETF's dollar-weighted average maturity in line with the index contributes to the fund's appeal among investors seeking exposure to high-yield bonds while managing credit risk.
The BKHY ETF, although primarily focused on tracking the high yield bond market, also provides dividend distributions to its investors. These distributions are influenced by the performance and dividend policies of the bonds within the Bloomberg US Corporate High Yield Total Return Index, which the ETF seeks to replicate. Typically, dividends from this ETF occur periodically, and investors should check the ETF's dividend eligibility and distribution policies for specific details. While BKHY may not be a primary choice for dividend-seeking investors, it can offer a balance of capital appreciation and some level of dividend returns.
Tracking the Bloomberg US Corporate High Yield Total Return Index is the primary objective of the BKHY ETF. This exchange-traded fund employs a systematic investment strategy based on rules to mimic the performance of this high-yield bond market benchmark. BKHY typically invests at least 80% of its assets in bonds included in the Bloomberg US Corporate High Yield Total Return Index. Additionally, the fund may utilize derivatives such as credit default swap indexes, total return swaps, structured notes, and futures to achieve its goal. The index itself encompasses U.S. dollar-denominated, high-yield, fixed-rate, taxable corporate bonds, including those from foreign issuers, with at least $150 million in par amount outstanding and a credit rating of Ba1/BB+/BB+ or lower by Moody's, Fitch, and S&P. BKHY's strategy involves maintaining a dollar-weighted average maturity in line with the index and generally employs a representative sample of the index's securities to track its performance. As of December 31, 2022, the index comprised approximately 2,000 securities with a dollar-weighted average maturity of 5.5 years. Additionally, BKHY may concentrate its assets in specific industries to the extent the index does so, with the Consumer Cyclical industry accounting for 22.9% of the index as of the same date. While BKHY is classified as diversified under the Investment Company Act of 1940, it may become non-diversified if the index composition changes significantly, potentially leading to a higher concentration of assets in a limited number of issuers.
The correlation aspect of the BKHY ETF, which tracks the Bloomberg US Corporate High Yield Total Return Index, is primarily known for its relationship with the high-yield bond market. Given its investment strategy, BKHY tends to have a strong positive correlation with high-yield corporate bonds, making it a suitable choice for investors seeking exposure to this asset class. Its correlation with other fixed-income securities, such as investment-grade bonds, is generally less pronounced. To delve deeper into BKHY's correlations and gain valuable insights into its behavior, investors can leverage ETF Insider's web app, which offers comprehensive data visualization tools to analyze overlaps with various asset classes, helping make informed investment decisions.
The BKHY Sector is primarily focused on high-yield corporate bonds within the U.S. fixed-income market. This sector is characterized by investments in bonds that have lower credit ratings, typically classified as junk bonds. The fund aims to track the performance of the Bloomberg US Corporate High Yield Total Return Index, which includes bonds with $150 million or more par amount outstanding and lower credit ratings. This sector can provide potentially higher yields for investors, but it also carries a higher level of credit risk compared to investment-grade bonds. As of December 31, 2022, the index was comprised of approximately 2,000 securities with a dollar-weighted average maturity of 5.5 years, and the sector may have concentration in certain industries, such as Consumer Cyclical, based on the index's composition.
The exposure characteristics of the BKHY ETF are designed to offer investors access to the high-yield bond market. This ETF, which follows the Bloomberg US Corporate High Yield Total Return Index, primarily invests in bonds that meet specific criteria, including a minimum par amount outstanding and credit ratings below Ba1/BB+/BB+. These bonds represent a segment of the U.S. dollar-denominated, high yield corporate bond market, providing exposure to companies with varying credit qualities. Investors looking to gain exposure to high-yield bonds and diversify their fixed-income portfolio can consider BKHY as an investment option.
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