According to The Federal Reserve’s chairman Jerome Powell’s remarks Friday morning at the Fed’s annual symposium in Jackson Hole, Wyoming, the central bank has no plans to take its foot off the gas pedal in its tightening policy aimed at curbing inflation. It means investors must consider diversifying their portfolios further away from the U.S. (and European for this purpose) equities.

The ProShares High Yield Interest Rate Hedged ETF (HYHG) provides access to an interest rate-hedged portfolio of high-yield bonds. It offers investors a portfolio that is interest rate hedged against high yield bonds. The ProShares High Yield Interest Rate Hedged ETF tracks the return of a High Yield Bond Interest Rate Hedged Index.

The HYHG ETF provides the return potential of a diversified high-yield corporate bond portfolio through a short position in Treasury futures without the associated interest rate risk. The HYHG tracks the performance of the FTSE High Yield (Treasury Rate-Hedged) Index, an index that is comprised of long positions in US-dollar denominated high yield corporate bonds and short positions in U.S. treasury notes or bonds that in aggregate, achieve an overall portfolio effective duration of zero.

The index is reconstituted and rebalanced on a monthly basis when the treasury short position is reset as well. Therefore, HYHG ETF must be viewed as a direct bet on the direction of high-yield spreads. When high-yield bond spreads widen, the total return of the HYHG ETF tends to suffer.

But first, as credit spreads transitorily returned to average, investors should be prepared to wait for them to rise above average before buying the HYHG ETF. The HYHG ETF has been strong in the short-term, but its long-term returns have been more modest and driven by changes in credit spreads.