Can You Use ETFs to Invest in High Yield Bonds?

Against a backdrop of increased popularity, it becomes important to assess if high-yield ETFs truly are the efficient alternative to active funds

Jose Garcia-Zarate 23 January, 2018 | 11:43AM Niels Faassen

Active vs Passive fund management

The active versus passive investing debate has been a recurring event ever since the launch of the first exchange-traded funds. As a low-cost, index-tracking alternative to active funds, passives have been gaining in popularity across all asset classes.

In the high-yield bond area, passive solutions in the EUR high-yield bond and USD high-yield bond Morningstar Categories already have market shares of 15% and 11%, respectively. In both cases, iShares is the dominant provider, with the iShares € High Yield Corporate Bond ETF (IHYG) and the iShares $ High Yield Corporate Bond ETF (HYG) trumping all other competing ETFs by a large margin in terms of assets under management and pertaining to the largest funds in their respective categories.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
iShares € High Yield CorpBd ETF EUR Dist97.06 EUR-0.45
iShares iBoxx $ High Yield Corp Bd ETF  
Robeco European High Yield Bonds DH €217.28 EUR-0.84

About Author

Jose Garcia-Zarate

Jose Garcia-Zarate  is Associate Director of Passive Strategies Research for Morningstar Europe

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