Opinions
Lorne Steinberg
iShares Hi Yield Corp Bond ETF
HYG-N
DON'T BUY
Jul 26, 2022
A great time to buy high-yield bonds, paying over 7%. But Canadians shouldn't buy HYG, because the USD is strong and if it falls, it will hurt you. Instead, buy a bond ETF that's currency-hedged.
$76.505
Stock price when the opinion was issued
E.T.F.'s
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WEAK BUY
Hi Yield Corp Bond ETF. Diversification reduces risk of holding low-investment-grade bonds. Gives full exposure to high yields as an asset class. Higher asset class has performed very well over the last decade. Prefers Canadian hedged versions such as the High Yield Bond ETF (CHB-T) because of currency changes, especially in RRSPs.
E.T.F.'s
HOLD
The high-yield bond market in the US is interesting. In January everybody thought the troubles in the high-yield bond market would echo itself into something that would look more like a sub prime crisis in 2008. He had disagreed with this, so has been very Long on this all year. The bond and credit markets have done really well over the last few months, so he would recommend you shorten your duration in bond markets and increase your credit risks.
E.T.F.'s
COMMENT
One of the biggest risks is the credit markets in the sheer amount of debt that is sitting at investment-grade that will get downgraded. This is a high yield bond ETF. $75 to $80 is probably the range that you want to nibble away at. There will be some value developing in the high yield space.
E.T.F.'s