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OP, there are high-yield bond funds available in Schwab. Check out TIYRX and PHYZX. Schwab's low-fee equivalent looks to be SCYB at 0.03% expense ratio.
Having written that, you also need to be aware of the warnings issued by the other posters. Higher yield = higher risk, especially with the older bonds having lower coupon rates which means the price drops until the yield approaches that of current coupon rates.
keep in mind high yield funds are going to be quite different then ffhrx .
phyzx has a 3.3 year duration compared to ffhrx which can have a duration spanning days or a month with a floating rate. that makes conventional high yield funds more sensitive to rates as far as drops or gains and yields if they rise don’t float upward for a while.
loan rates float even in existing loans so that is what makes ffhrx different
I also might add in the junk category that interest rate risk is amplified because it not only discounts the capital of the holding at the lower rates but rising rates also puts stress on the junk category with default risk.
Its no place to replace cash. Its a bet on the direction of interest rates , and in this case lower or at least flat.
in this case fhrrx is a bet rates will rise or stay about the same . rates float upward on loans
conventional high yield is hurt by rising rates and helped by falling rates like all bonds . ffhrx is not a conventional bond fund , it’s a floating rate fund, it is helped by rising rates
Okay let me ask this. In order to get such a high return in such a short duration does that mean the fund trades lower rated bonds frequently throughout the year?
what i like about ffhrx is unlike traditional high yield which has both interest rate risk and credit risk , ffhrx has just credit risk .
but because the loans are so short the credit risk is mitigated . unlike traditional high yield bond funds that go out years in duration , ffhrx is days to a month or so .
Okay let me ask this. In order to get such a high return in such a short duration does that mean the fund trades lower rated bonds frequently throughout the year?
They own high risk loans with interest rates that reset in the short term. Great on the way up. Not as great on the way down,
They own high risk loans with interest rates that reset in the short term. Great on the way up. Not as great on the way down,
exactly ..they are very different from conventional high yield funds which is why you cannot replace ffhrx with them ..they are pretty opposite in what part of the cycle they are best for.
based on my cost i am getting about 10%
it makes up about 10% of my total invested assets
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