FDHY vs SCYB

FDHYBFidelity Enhanced High Yield ETF

SCYBASchwab High Yield Bond ETF

In short

FDHY Most high yield ETFs just buy the index. FDHY is Fidelity's active, quant-driven version: value and quality screens run against a BB-B benchmark, priced below the typical fund in the category.

SCYB Three basis points for the broad US high-yield corporate market. Schwab undercuts a category where the typical fund charges more than ten times as much, spreading the bet across roughly 1,800 bonds and paying monthly.

Stated mandate

FDHY The fund seeks a high level of income and may also pursue capital appreciation. It uses a quantitative, rules-based approach intended to exploit market inefficiencies.

SCYB The fund follows a rules-based strategy intended to track the high-yield bond market, primarily through bonds in the Bloomberg Barclays US Corporate High Yield Total Return Index and similar derivatives.

Why people hold it

• FDHY Active where most of the category is passive. A rules-based value and quality screen picks the bonds, measured against the ICE BofA BB-B US High Yield Constrained Index.
• 0.35% a year undercuts the 0.40% median for high yield ETFs, unusual for a fund with a manager and a research process behind it.
• Income lands monthly, and the strategy has been running in ETF form since 2018, not a recent launch chasing a theme.

• SCYB 0.03% a year against a category median of 0.40%. Even the cheap rivals sit above it: SPHY at 0.05%, USHY at 0.08%.
• Tracks the same Bloomberg US Corporate High Yield index as BKHY, which charges 0.22%. Same map, cheaper toll.
• Roughly 1,800 bonds, so no single issuer's blowup drives the outcome. Rules-based and passive, and it has hugged its index closely.
• A multi-billion-dollar fund that trades actively and pays monthly, which matters in a corner of the market where getting out cheaply is half the job.

Worth knowing

• FDHY Plain index rivals cost a fraction: SCYB at 0.03% and SPHY at 0.05%. You are paying for the selection process, so it has to earn the gap.
• About 300 bonds is a tighter net than the broad trackers that own the whole market, so individual credit calls carry more weight here.
• Trading is moderate rather than heavyweight next to the largest high yield ETFs, which can matter on bigger or faster orders.

• SCYB High yield means below-investment-grade credit. These bonds behave more like stocks than Treasuries when the economy sours, and the extra income is the payment for that risk.
• Launched in 2023, so it has a shorter record than rivals that have traded through more credit cycles.
• The strategy can hold derivatives alongside the bonds themselves to track the index, one layer beyond plain bond ownership.

Full FDHY profile⁠

Full SCYB profile⁠