Xtrackers USD High Yield Corporate Bond UCITS ETF 4D GBP Hedged

Issuer: Xtrackers

Asset Class: Fixed Income

TER: 25bps

Trading Currency: GBP

Pays Income: False

Listing Date: 30 Jun 2022

Ticker: XUHG

ISIN: IE00BG04LV15

This financial instrument provides targeted exposure to the European high-yield corporate bond market. It is designed to replicate the performance of an index comprising sub-investment grade, fixed-rate bonds denominated in Euros and issued by a diverse range of corporations. The portfolio is spread across various industrial sectors and countries within the Eurozone, offering a broad representation of the region's higher-yielding debt landscape. These bonds, often referred to as 'junk bonds', are issued by companies with lower credit ratings and consequently offer higher coupon payments to compensate investors for the greater associated credit and default risk compared to their investment-grade counterparts.

The product is suitable for investors aiming to augment their portfolio's income potential and who have a higher tolerance for credit risk. Its specific focus on the Eurozone can serve as a valuable tool for geographic diversification within a global fixed-income allocation. While the elevated yields can be particularly appealing in periods of low prevailing interest rates, it is crucial for investors to recognize that the value of these assets is more susceptible to economic downturns and shifts in corporate creditworthiness. This specific share class also incorporates a currency hedging strategy, which aims to minimize the impact of exchange rate fluctuations between the Euro and the British Pound. This feature is particularly advantageous for UK-based investors, as it isolates returns primarily to the performance of the underlying bond assets, thereby reducing volatility from foreign exchange movements.