I’m currently exploring options for a GBP-denominated corporate bond ETF, ideally with currency hedging, that could outperform the yield of a money market fund like CSH2.
With interest rates on a downward trend, I’m looking for a relatively low-risk vehicle targeting a 5%+ yield over the next 12 months.
The iShares Global High Yield Corp Bond GBP Hedged UCITS ETF (GHYS) appears to be a strong (perhaps only?) candidate that fits this profile.
Do you have any thoughts or considerations on allocating funds to GHYS versus a MMF over the coming year? I’d be especially interested in your view on:
- Risk/return trade-offs in the current macro environment
- Duration and credit exposure
- Whether a staggered entry or lump sum investment would be more appropriate
Thanks in advance for your inputs.
One observation from me, for what it’s worth. It might be a winning strategy for all I know, but isn’t this a little like comparing apples and oranges, ie the riskier end of bonds vs cash-like instruments?
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Just get a fixed saver account.
A quick google would suggest Raisin offer a 4.35% 1 year fixed, which is 0.65% lower than the 5% target you have set yourself, BUT they offer a £50 bonus for new customers depositing more than 5k, so if you are saving 5-7.5k, then that beats your 5% target.
Premium bonds have an average return of 3.8% but with much greater upside.
RBS/Natwest have a 6% variable digital saver. You could drop £500 a month into these also.
Alternatively at the far riskier end, GSF, UKW, MNG, LGEN all have yields of 8-10%, but you have more volatility in your capital.