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High-Yield International Bond ETF (IHY) Hits New 52-Week High

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For investors seeking momentum, VanEck Vectors International High Yield Bond ETF (IHY - Free Report) is probably on radar now. The fund just hit a 52-week high and is up about 7.9% from its 52-week low price of $23.52/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

IHY in Focus

This ETF offers exposure to the U.S. dollar, Canadian dollar, pound sterling and euro denominated below investment grade corporate bonds issued by non-U.S. corporations in the major domestic or Eurobond markets. It holds 433 securities in its basket with none accounting for more than 1.03% of total assets.

Effective duration of the fund is 3.48 years, resulting in modest interest rate risk while its average maturity is 5.40 years, leading to moderate default risk. It charges 40 basis points in annual fees. The fund yields about 4.60% annually (see all High-Yield/Junk Bond ETFs here).

Why the Move?

The Euro is on a tear lately thanks to the speculation about the ECB’s QE wind down. As a result, bond yields in the Euro zone have been on an uptrend. In the U.S. also, monetary policy tightening is an ongoing program, which may give bond yields an upward pressure in the near term. As a result, investors seeking benchmark-beating yield rushed to this high-yield international bond ETF.

More Gains Ahead?

The fund has a positive weighted alpha of 5.80. Since a positive weighted alpha hints a more gains, there is little more promise for this high-yield bond ETF. 

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