SHYG: Prices Front-Of-Mind For Embattled Consumers, Risk For Consumer Cyclical Credit

Valkyrie Trading SocietyInvesting Group LeaderFollow5ShareSavePlay(8min)CommentsSummaryiShares 0-5 Year High Yield Corporate Bond ETF faces unfavorable risk/reward due to the risk of rising credit spreads.Recent risk-on sentiment is premature; failed ceasefire talks and persistent inflation risks could drive credit spreads higher, negatively impacting SHYG pricing.SHYG's sector tilt toward consumer cyclicals and communications heightens vulnerability to deteriorating consumer sentiment and inflation expectations.Despite a lower 0.3% expense ratio versus peers, and at a 2-year duration it's not the most sensitive ETF, we wouldn't want it over sitting on cash given the war.Looking for a helping hand in the market? Members of The Value Lab get exclusive ideas and guidance to navigate any climate. Learn More » Torsten Asmus/iStock via Getty Images The iShares 0-5 Year High Yield Corporate Bond ETF (SHYG) was looking up in our previous coverage as the inflation battle seemed to have been won in the US. That no longerThis article was written byValkyrie Trading Society5.54K FollowersFollowThe Valkyrie Trading Society is a team of analysts sharing high conviction and obscure developed market ideas that are downside limited and likely to generate non-correlated and outsized returns in the context of the current economic environment and forces. They are long-only investors.They lead the investing group The Value Lab where they offer members a portfolio with real time updates, chat to answer questions 24/7, regular global market news reports, feedback on member stock ideas, new trades monthly, quarterly earnings write-ups, and daily macro opinions.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.