Goldman Sachs's New Bond ETF Shuns the Riskiest DebtBy
High-yield bond fund, GHYB, aims to address default concerns
Speculative-grade debt slumped in August, pushing up yields
Investors who like junk bonds but are nervous about last month’s high-yield selloff have a new vehicle that lets them avoid the riskiest debt.
Goldman Sachs Group Inc.’s latest exchange-traded fund, which has the ticker GHYB, will focus on high-yield corporate bonds deemed least likely to default, according to an announcement Thursday.
Junk bonds tumbled last month as a combination of geopolitical turmoil and uncertainty about the normalization of U.S. interest rate policy weighed on risk sentiment. Yields jumped from near historic lows, with the premium paid by companies over Treasuries climbing to the highest in four months, a Bloomberg index shows. Investors yanked $500 million from the biggest junk ETF, the most since May, data compiled by Bloomberg show.
The new fund, Goldman’s third debt ETF, “aims to address concerns surrounding high-yield bonds, particularly that they can be less liquid and more prone to default,” Jason Singer, who runs the fund for Goldman Sachs Asset Management, said in the release.
While it’s not the first fund to use such a strategy, Goldman Sachs’s offering comes with a smaller price tag than rival ETFs. It charges just 34 basis points, less than all but three junk funds. BlackRock Inc.’s high-yield ‘‘defensive’’ bond ETF charges 1 basis point more, while WisdomTree Investments Inc.’s ‘‘fundamental ETF” charges an extra 4 basis points.