HYZD vs SPHY

HYZDCWisdomTree Interest Rate Hedged High Yield Bond Fund

SPHYAState Street SPDR Portfolio 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.

SPHY State Street's junk-bond workhorse: roughly 1,900 US high yield bonds in one wrapper for 0.05% a year, a fraction of what the typical high yield ETF charges, with income paid 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.

SPHY The fund seeks to track, before fees and expenses, the price and yield performance of the ICE BofA US High Yield Index.

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.

• SPHY 0.05% a year against a peer-group median about eight times higher. In high yield, the fee comes straight out of coupon income, so the gap does real work.
• Holds about 1,900 bonds tracking the ICE BofA US High Yield Index, broad enough that no single issuer's trouble dominates the portfolio.ssga.com
• Live since 2012, a multi-billion-dollar fund that trades actively and has stuck tightly to its stated index rather than drifting from the mandate.
• Distributions arrive monthly, in step with how the underlying coupons come in.

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.

• SPHY This is below-investment-grade credit. Defaults and spread moves drive the price far more than Treasury yields do, and sell-offs in this asset class can be sharp.
• Fees here are already near the floor: SCYB lists 0.03% and HYLB matches at 0.05%, so the cost edge over the strongest peers is narrow.
• Scope is US high yield corporates, full stop. No investment-grade ballast, no emerging market debt, nothing to soften a credit drawdown from inside the fund.ssga.com

Full HYZD profile⁠

Full SPHY profile⁠