Investment Yield: Earns a 6.6% interest through a globally dispersed Exchange-Traded Fund (ETF)
The iShares Global High Yield Corp Bond UCITS ETF, managed by BlackRock, has been a promising investment option for those who can handle fluctuations in value. With over €721 million currently invested in customer funds, this ETF offers semi-annual payouts and a current yield to maturity of 6.6%.
In a low-interest-rate environment, this high-yield ETF presents opportunities for price gains. However, it's important to note that the higher returns of corporate bonds have occurred under significantly higher volatility. The ETF is diversified across more than 1,800 titles and multiple currency areas, reducing the risk associated with individual investments.
In the past five years, investors have achieved a return of 16% with this ETF, including payouts. For comparison, the Xtrackers Germany Government Bond UCITS ETF for German government bonds has lost around 15% in the same period. Notably, the iShares Global High Yield Corp Bond UCITS ETF temporarily lost 25% of its value during the corona crisis.
The weight of the top 10 positions in the ETF is only 4.5%, ensuring a broad investment spread. This ETF invests in corporate bonds one level below investment grade (high-yield bonds), offering substantial returns that could be attractive to investors seeking long-term investments.
While the investment in high-yield bonds carries a higher risk, the diversified nature of this ETF and the potential for price gains make it a worthwhile consideration for those with a risk tolerance for fluctuations in value. As always, it's essential to conduct thorough research and consider your individual investment goals before making any decisions.
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