USHY, CLOZ, and TLTW offer yields above 6% amid Fed rate cuts and shifting fixed-income risks.
Three bond ETFs—iShares Broad USD High Yield Corporate Bond ETF (USHY), Panagram BBB-B CLO ETF (CLOZ), and iShares 20+ Year Treasury Bond BuyWrite Strategy ETF (TLTW)—deliver yields exceeding 6% as the Federal Reserve reduces its target rate from 4.5% to 3.75% over the past year. Reinvestment risk in money market funds has heightened demand for higher-yielding alternatives.
USHY yields 6.9% with a 0.08% expense ratio, leveraging junk credit spreads, while CLOZ targets similar income through collateralized loan obligation mezzanine tranches. TLTW’s 11% distribution yield contrasts with a 3% one-year total return due to principal erosion from its covered-call strategy. The 10-year Treasury yield hovers near 4.7%, with the yield curve steepening modestly.
Goldman Sachs Asset Management projects the Fed’s policy rate could settle at 3% to 3.25% by year-end 2026 under a soft-landing scenario, compressing cash yields and pushing investors toward riskier income strategies.