Buy iShares iBoxx $ High Yield Corporate Bond (HYG)   Leave a comment

I am starting to accumulate a large cash position in my long-term 401k portfolio. Since my cash is basically earning squat, and I probably won’t need the cash for a few months, what to do? Since my 401k is with Fidelity, I decided to buy some iShares iBoxx $ High Yield Corporate Bond (HYG). Fidelity doesn’t charge a trading fee for it (as long as I hold it at least 30 days), and HYG pays almost 6% in annual dividend yield (paid monthly). HYG also has low volatility, which makes it a bit safer than most equity investments.

Admittedly, high yield corporate bonds are risky. However, HYG holds 897 different bonds, with it’s largest holding being only 0.57% of the portfolio. It is extremely well-diversified, thereby keeping the risk low. It also has average volume above 4 million shares traded daily over the past 3 months, so there is plenty of liquidity.

I added HYG at $94.43.

Posted February 25, 2014 by edmcgon in 401(k), Portfolio Moves

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