Q: Considering recent interest rate reductions can you please advise on investing in xhy.to or ushy at this point? Are they equivalent but just in different currencies?
Thanks.
Thanks.
5i Research Answer:
They follow very similar bonds but have slightly different indices they match against. USHY uses a 'broad' US high yield index, XHY a more generalized high yield index. But performance (currency adjusted) has been fairly close over five years but USHY has small advantage in performance. USHY is far larger ($25B vs $885M) and cheaper (fees 0.08% vs 0.56%). High yield bonds should do well with lower rates, UNLESS there is big concern about a recession and corporate credit quality. We would be comfortable investing in either but USHY looks a bit better.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in XHY.