The issuer of the XHYI ETF, or the Fund, is committed to providing investors with exposure to the ICE Diversified US Cash Pay High Yield Core Industrial Index. This ETF is non-diversified and primarily consists of U.S. dollar-denominated below investment grade bonds issued by industrial sector companies, including those in basic materials, capital goods, transportation, and services. The Index follows a modified market value-weighted approach, with a cap on each issuer at 25% of the market capitalization. As of December 31, 2022, the Index included approximately 490 constituents, with regular reconstitution and rebalancing. The issuer employs a passive indexing strategy, aiming to replicate the Index's performance while minimizing costs and maintaining low portfolio turnover. The Fund seeks to invest at least 80% of its net assets in high-yield bonds from industrial sector issuers and may also utilize futures, options, and other instruments to achieve its objective. The issuer emphasizes industry concentration in line with the Index, currently favoring basic industry, capital goods, and services sub-sectors.
The XHYI Dividend reflects the dividend distribution of the iShares iBoxx $ High Yield Corporate Bond ETF (XHYI). This ETF primarily focuses on high-yield corporate bonds, which are not typically associated with regular dividend payments. Dividend eligibility in this case depends on the interest payments generated by the underlying bonds, and these distributions generally occur on a monthly or quarterly basis, mirroring the interest payments from the bonds held within the ETF. It's important to note that XHYI's dividend yield is influenced by prevailing interest rates and the credit quality of the bonds held in its portfolio, making it suitable for income-seeking investors with a higher risk tolerance.
Tracking the ICE Diversified US Cash Pay High Yield Core Industrial Index is the primary objective of the Alternative Sources XHYI ETF. This ETF is designed for investors seeking exposure to U.S. dollar-denominated below investment grade bonds within the industrial sector, including basic materials, capital goods, transportation, and services sub-sectors. The ETF aims to closely mirror the performance of the index, which consists of bonds from issuers with significant industrial asset exposure, providing investors with a diversified approach to high-yield bonds in this specific sector.
The correlation aspect of the ICE Diversified US Cash Pay High Yield Core Industrial Index ETF is essential in understanding its behavior in relation to the broader U.S. high-yield bond market. As ICE Diversified US Cash Pay High Yield Core Industrial Index ETF seeks to track the ICE Diversified US Cash Pay High Yield Core Industrial Index, its correlation with this specific bond index is expected to be strong. Investors rely on this correlation to gauge the ETF's performance and risk characteristics in comparison to the underlying index.
The XHYI ETF, known as the ICE Diversified US Cash Pay High Yield Core Industrial Index ETF, is heavily concentrated in the industrial sector. This sector comprises various sub-sectors, including basic materials, capital goods, transportation, and services. XHYI provides exposure to below-investment grade U.S. dollar-denominated bonds issued by companies with significant revenue or profit generation from industrial assets. It's worth noting that the ETF's focus on junk bonds and the industrial sector may present higher risks, but it aims to track the performance of the Index before fees and expenses effectively.
The exposure profile of the ICE Diversified US Cash Pay High Yield Core Industrial Index ETF(XHYI) focuses on a unique investment strategy utilizing Flexible Exchange® Options (FLEX Options) referencing the SPDR® S&P 500® ETF Trust as its underlying asset. XHYI invests at least 80% of its net assets in FLEX Options, which offer customizable terms for investors but also entail counterparty risk. The ETF primarily tracks the performance of the S&P 500® Index, providing exposure to large-cap U.S. companies, with a notable emphasis on the information technology sector. For a detailed analysis of XHYI's exposure and performance outcomes, investors can leverage the ETF Insider web app, which offers in-depth data visualization, correlation analysis, and more for a comprehensive understanding of this unique investment vehicle.
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