Asset manager Pimco and exchange-traded fund (ETF) provider Source have launched a short-term high yield corporate bond index product.
The Pimco Short-Term High Yield Corporate Bond Index Source ETF will be listed on the London Stock Exchange.
It will track the BofA Merrill Lynch 0-5 Year US High Yield Constrained index, which includes 821 securities.
Vineer Bhansali, managing director at Pimco, says: “For investors looking to allocate to the corporate and high yield bond sector, it is worth noting that over the last fifteen or so years the shorter-dated high yield corporate bond sector has delivered similar yields, lower volatility and a lower correlation to equities than longer-dated high yield corporate bonds.
“Returns on a diversified basket of high yield bonds tend to be less volatile than equities over a long holding horizon because the income component of the return is typically larger than that of equities, providing an added measure of stability.”
The ETF will be traded in US dollars and carries a management fee of 0.55%.