FDHY vs USHY

FDHYBFidelity Enhanced High Yield ETF

USHYAiShares Broad USD High Yield Corporate 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.

USHY The wide-angle lens on junk bonds: about 1,900 US dollar high yield corporate issues for 0.08% a year, a fifth of what the typical fund in its category charges. Broad, cheap, heavily traded, and it pays 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.

USHY The fund seeks to track an index of U.S. dollar-denominated high yield corporate bonds.

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.

• USHY Charges 0.08% a year while the median high yield fund in its cohort runs 0.40%. Cheap rent on an expensive-to-run corner of the bond market.
• Holds about 1,900 bonds against the ICE BofA US High Yield Constrained Index: the broad market, not a curated slice of the most liquid names.ishares.com
• A multi-billion-dollar fund and one of the more actively traded in high yield, which tends to keep bid-ask spreads thin even on busy days.
• Pays monthly and has tracked its index tightly since its 2017 launch, one of the closer index matches in its peer group.

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.

• USHY High yield means below-investment-grade borrowers. When credit gets stressed this asset class drops with stocks instead of cushioning them.
• Cheaper tickets sit on the same shelf: SCYB at 0.03% and SPHY at 0.05%.
• This is a fund, not a bond ladder. No maturity date hands your principal back; the basket rolls on indefinitely.

Full FDHY profile⁠

Full USHY profile⁠