HYZD vs SCYB

HYZDCWisdomTree Interest Rate Hedged High Yield Bond Fund

SCYBASchwab High Yield Bond ETF

In short

HYZD High yield credit with the rate risk hedged out. HYZD tracks an index that holds a broad basket of US junk bonds at roughly zero duration, so what you own is the credit call, not the rate call. WisdomTree has run it since 2013.

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

HYZD The Fund seeks to track the price and yield performance, before fees and expenses, of the WisdomTree U.S. High Yield Corporate Bond, Zero Duration Index.

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

• HYZD The whole point: it tracks a zero-duration index, so the outcome rides on corporate credit rather than on where Treasury yields go.
• Roughly 500 US high yield bonds sit behind the hedge, and income is paid monthly.
• Rules-based index tracking rather than a manager's rate call, live since 2013 and through several rate cycles.

• 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

• HYZD 0.43% a year sits a shade above the typical high yield ETF, and vanilla rivals go far cheaper (SCYB 0.03%, SPHY 0.05%). The hedge is what you pay up for.
• The hedge cuts both ways: stripping duration also strips out the price lift a standard high yield fund gets when rates fall.
• Mid-sized and moderately traded rather than a category heavyweight, so spreads can run wider than at the largest high yield ETFs.

• 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 HYZD profile⁠

Full SCYB profile⁠