How does the HIYS ETF work?
6 min read
By Ron Koren, ETF Insider

How does the HIYS ETF work?

The HIYS ETF, or High Yield Securities Exchange-Traded Fund, is an actively managed financial instrument designed to achieve its investment objective by focusing on a unique segment of the market. In this article, we will delve into the details of the HIYS ETF, its underlying assets, benefits for investors, and important considerations before investing.

HIYS ETF Underlying and Exposure: What Does It Track and How?

To understand how the HIYS ETF works, it's essential to first examine its underlying assets and exposure. This ETF primarily invests in relatively higher quality below investment grade fixed-income securities, often referred to as "high yield securities" or "junk bonds." These securities have more speculative characteristics compared to investment-grade bonds. The HIYS ETF also includes derivatives and other instruments with economic characteristics similar to high yield securities.
The fund defines higher quality securities as those rated between B- and BB+ by a nationally recognized statistical rating organization (NRSRO) or, if unrated, deemed to be of comparable quality by Invesco Advisers, Inc. Investment grade securities, on the other hand, typically have ratings of at least BBB- by an NRSRO or are deemed comparable by the Sub-Adviser.
It's important to note that the HIYS ETF may allocate up to 10% of its net assets to securities rated below B- in the event of a rating downgrade. This flexibility allows the fund to adapt to changing market conditions.
In addition to high yield bonds, the HIYS ETF may invest in various types of fixed-income securities, including corporate bonds, convertible securities, mortgage-backed securities (MBS), and asset-backed securities (ABS). MBS and ABS represent fractional interests in pools of loans or receivables and may include collateralized mortgage obligations (CMOs), collateralized loan obligations (CLOs), and collateralized debt obligations (CDOs).
Furthermore, the HIYS ETF has the flexibility to invest in derivative instruments, such as swap agreements, options, futures contracts, and forward foreign currency contracts. These instruments are used to hedge or adjust exposure to interest rates or credit risk and manage the portfolio's duration.

HIYS overlap How does work the HIYS ETF?HIYS overlap How does work the HIYS ETF?

HIYS ETF: Benefits to Invest In

Investors may find several compelling reasons to consider the HIYS ETF as part of their portfolio. One significant benefit is the potential for attractive yields, as high yield securities often offer higher interest payments compared to investment-grade bonds. This can provide income-seeking investors with a source of regular cash flow.
Additionally, the HIYS ETF's active management approach allows for flexibility in selecting and managing the portfolio's assets. This flexibility can be advantageous in navigating the dynamic fixed-income market and seizing opportunities as they arise.
Furthermore, the ETF's diverse asset allocation, including exposure to various fixed-income instruments and derivatives, can help enhance portfolio diversification and reduce risk.

HIYS ETF: Considerations Before Investing

Before investing in the HIYS ETF or any financial instrument, it's crucial to consider certain factors:
Risk Tolerance: High yield securities come with increased risk compared to investment-grade bonds. Investors should assess their risk tolerance and investment goals before allocating capital to this ETF.
Market Conditions: The performance of the HIYS ETF can be influenced by economic conditions, interest rates, and credit markets. Staying informed about market trends is essential.
Liquidity Needs: As the HIYS ETF may invest up to 15% of its net assets in illiquid securities, investors should consider their liquidity needs and investment horizon.
Credit Quality: Understanding the credit quality of the ETF's holdings and the potential impact of ESG (Environmental, Social, and Governance) factors on issuers is essential for responsible investing.
In conclusion, the HIYS ETF offers investors exposure to a unique segment of the fixed-income market. While it can provide attractive yields and diversification benefits, it's essential to conduct thorough research and assess your own financial objectives and risk tolerance before investing.

Disclaimer: This article provides information about the HIYS ETF for educational purposes only and does not constitute investment advice. The author does not provide investment advisory services. Always consult with a financial professional before making investment decisions.

Note: Throughout the article, the keyword "[ETF NAME]" has been used as a placeholder. Please replace it with the actual name of the ETF you wish to discuss.

HIYS ETF issuer
HIYS ETF official page

HIYS quote and analysis

Discover the top holdings, correlations, and overlaps of ETFs using our visualization tool.
Our app allows you to build and track your portfolio.
To learn more about the HIYS Invesco High Yield Select ETF, access our dedicated page now.

Get started


  • What is the HIYS ETF?

    The HIYS ETF is an exchange-traded fund that provides investors with exposure to a specific sector.

  • What is the underlying index that the HIYS ETF aims to track?

    The HIYS ETF aims to track the performance of a specific index, which includes companies involved in its respective sector.

  • What types of companies are included in the HIYS ETF?

    The HIYS ETF includes companies from its focused industry.

  • How does the HIYS ETF work?

    The HIYS ETF functions by pooling investors' capital to purchase a diversified portfolio of sector-related stocks.

  • What are the advantages of investing in the HIYS ETF?

    Investing in the HIYS ETF offers exposure to a specialized sector with potential for growth.