Why Shana Doesn't Like HYGH

I really dislike Hygh.

I think Tony was very diplomatic about what he said.

Um my feedback on it is this is a fund that you would only be interested in if it was a rising rate environment.

And even then when rates rise, you're usually compensated in some way through the yield and the coupons of high yield for that.

Um, so while there might be a short-term dislocation and some volatility, overall it kind of evens itself out over time, I would not want to get into the game of trying to choose when I should own this fund.

In fact, when I was doing my research on the fund, one of the first articles that came up is how much money has had moved out of this product in the last 12 months because it is really just when rates are rising.

It's hedging interest rates, but the only time that's an advantage is if rates are going up, not when they're going down. that's actually the environment you want the interest rate exposure.

Um, and so I don't like it.

Like Tony said, it uses swaps.

That brings in additional risks.

When you use options, you start worrying about optionality, volatility in option markets.

Swaps are a form of a derivative in a way, not technically an option like a call or a put, but in the same world.

Um, and then, um, the counterparty risk you're bringing in there as well.

And so I just think that you're bringing in risk for a a timing vehicle and I don't think it's necessary.