iShares iBoxx $ High Yield Corporate Bond ETF (HYG) represents the U.S. dollar-denominated high-yield liquid corporate bond market. With the rebounding bond market, it could be a solid investment for investors looking to secure their portfolios against potential stock market volatility.

Global bonds rebounded in November 2022, adding a record $2.80 trillion in market value. Amid favorable inflation data in October and November, the Fed is expected to slow down its rate hike aggression and has sent dovish signals.

Moreover, Omar Slim, a fixed-income portfolio manager at PineBridge Investments in Singapore, said, “We are starting to see a number of economic indicators that point to the fact that inflation has peaked or is peaking.”

Furthermore, Goldman Sachs Group (GS) expects the bond market to fare well in 2023. The bank expects the bond market to even become less risky in 2023.

HYG has lost marginally over the past month and 14.5% in 2022 to close the last trading session at $74.39. However, it has gained 3.1% over the past three months.

Here is what could shape HYG’s performance in the near term:

Impressive Fund Stats

HYG has assets under management of $17.48 billion. The fund has net inflows of $6.09 billion over the past three months and $4.09 billion over the past six months. It has a beta of 0.42 and a NAV of $74.09.

Top Holdings

The fund has a total of 1210 holdings. Its principal holdings include U.S. Dollar with a 0.52% weighting, followed by TransDigm, Inc. 6.25% 15-MAR-2026 with a 0.50% weighting, and Mozart Debt Merger Sub, Inc. 3.875% 01-APR-2029 with a 0.43% weighting.

Attractive Dividend

HYG pays an annual dividend of $3.90 which yields 5.25% at the current share price. Its four-year average yield is 4.92%.

POWR Ratings Reflect Promising Prospects

HYG’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

HYG has a Trade grade of A and a Buy & Hold grade of B. In the 58-ETF High Yield Bond ETFs group, it is ranked #17.

Click here to see the POWR Ratings for HYG.

View all the top ETFs in the High Yield Bond ETFs group here.

Bottom Line

HYG pays a hefty dividend. Moreover, amid dovish Fed signals and declining inflation expectations, the bond market is expected to thrive in the near term. Given the backdrop, HYG might be an ideal buy now.

How Does iShares iBoxx $ High Yield Corporate Bond ETF (HYG) Stack up Against Its Peers?

While HYG has an overall POWR Rating of B, one might consider looking at its peers with an A (Strong Buy) rating: iShares 0-5 Year High Yield Corporate Bond ETF (SHYG), SPDR Blackstone Senior Loan ETF (SRLN), and Invesco Senior Loan ETF (BKLN).

HYG shares were trading at $74.19 per share on Tuesday morning, down $0.20 (-0.27%). Year-to-date, HYG has declined -10.31%, versus a -18.10% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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