HYZD vs USHY

HYZDCWisdomTree Interest Rate Hedged High Yield Bond Fund

USHYAiShares Broad USD High Yield Corporate 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.

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

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.

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

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.

• 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

• 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.

• 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 HYZD profile⁠

Full USHY profile⁠