LQD vs HYG ETF Comparison: AI Score, Valuation, Performance and Upside
LQD and HYG occupy adjacent rungs of corporate credit with very different characteristics. LQD holds investment grade bonds with low historical default rates and more interest rate sensitivity from longer maturities. HYG holds below-investment-grade bonds with far higher yield, higher default risk, shorter duration, and much closer behaviour to equities.
Use this LQD vs HYG comparison to separate rate risk from credit risk within corporate bonds. Investment grade gives you more of the former and less of the latter; high yield reverses that. Which you prefer depends on whether your portfolio is more exposed to rising rates or to a weakening economy.
HYG holds the edge across 3 of 5 key metrics in this comparison. HYG has delivered stronger 1-year price return (+2.08% vs -2.71% for LQD).
- Want corporate yield with low historical default rates
- Accept longer duration and its interest rate sensitivity
- Value broad diversification across investment grade issuers
- Want less equity-like behaviour than high yield offers
- Want substantially higher current income
- Prefer shorter duration and less rate sensitivity
- Understand and accept genuine default risk
- Recognise it behaves as a risk asset alongside equities
| Metric | LQD | HYG |
|---|---|---|
| ETF scorei | 37.0 | 42.0 |
| Latest closei | $103.21 | $77.86 |
| 1M returni | -2.94% | -2.02% |
| 6M returni | -1.79% | +1.93% |
| 1Y returni | -2.71% | +2.08% |
The ETF score weights long-term returns and risk-adjusted performance most heavily, but still rewards low expense ratios, larger fund size, and broader diversification — so it can favor low-cost, broad, mega-cap funds over smaller thematic or actively-managed funds even when the latter have delivered stronger returns.
How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?
| Period | LQD | HYG |
|---|---|---|
| 1Y ago | $10.2K (+2.0%) started 2025-09-25 | $10.85K (+8.5%) started 2025-09-25 |
| 5Y ago | $11.66K (+16.6%) started 2021-09-27 | $16.23K (+62.3%) started 2021-09-27 |
| 10Y ago | $18.31K (+83.1%) started 2016-09-26 | $30.76K (+207.6%) started 2016-09-26 |
Hypothetical — past performance does not guarantee future results.
| Metric | LQD | HYG |
|---|---|---|
| Expense ratioi | 0.14% | 0.49% |
| Total assets (AUM)i | $32.04B | $16.19B |
| Dividend yieldi | 4.67% | 5.88% |
| Trailing P/Ei | N/A | N/A |
| Betai | 0.45 | 0.42 |
| 52-week change | -2.71% | 2.08% |
| Metric | LQD | HYG |
|---|---|---|
| 1Y returni | -2.71% | +2.08% |
| 6M returni | -1.79% | +1.93% |
| 1M returni | -2.94% | -2.02% |
| 1Y Sharpe ratio | -1.31 | -0.61 |
| Betai | 0.45 | 0.42 |
| Dividend yieldi | 4.67% | 5.88% |
| 5Y CAGR | -1.34% | +3.27% |
Over the past year, LQD and HYG have moved strongly in the same direction (correlation of 0.76), based on daily returns.
Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.
| Period | Metric | LQD | HYG |
|---|---|---|---|
| 1Y | Growthi | -2.71% | +2.08% |
| CAGRi | -2.71% | +2.08% | |
| Volatilityi | 5.44% | 3.88% | |
| Sharpe ratioi | -1.31 | -0.61 | |
| Sortino ratioi | -1.67 | -0.83 | |
| Max drawdowni | 5.12% | 2.34% | |
| Current drawdowni | 5.07% | 2.04% | |
| Avg drawdowni | 1.51% | 0.39% | |
| Ulcer Indexi | 1.84% | 0.62% | |
| Max daily dropi | 1.23% | 0.93% | |
| Max wkly dropi | 1.92% | 1.10% | |
| 5Y | Growthi | -6.52% | +17.44% |
| CAGRi | -1.34% | +3.27% | |
| Volatilityi | 8.67% | 7.54% | |
| Sharpe ratioi | -0.63 | -0.13 | |
| Sortino ratioi | -0.86 | -0.18 | |
| Max drawdowni | 24.54% | 15.79% | |
| Current drawdowni | 6.90% | 2.04% | |
| Avg drawdowni | 10.48% | 3.58% | |
| Ulcer Indexi | 12.03% | 5.60% | |
| Max daily dropi | 2.31% | 3.35% | |
| Max wkly dropi | 4.94% | 6.34% | |
| 10Y | Growthi | +19.64% | +53.19% |
| CAGRi | +1.81% | +4.36% | |
| Volatilityi | 8.70% | 8.19% | |
| Sharpe ratioi | -0.27 | 0.01 | |
| Sortino ratioi | -0.37 | 0.02 | |
| Max drawdowni | 24.95% | 22.03% | |
| Current drawdowni | 7.41% | 2.04% | |
| Avg drawdowni | 6.56% | 2.42% | |
| Ulcer Indexi | 9.05% | 4.41% | |
| Max daily dropi | 5.00% | 5.50% | |
| Max wkly dropi | 13.25% | 12.87% |
| Category | LQD | HYG |
|---|---|---|
| Fund name | iShares iBoxx $ Investment Grade Corporate Bond ETF | iShares iBoxx $ High Yield Corporate Bond ETF |
| Type | ETF | ETF |
| Expense ratioi | 0.14% | 0.49% |
| Total assets (AUM)i | $32.04B | $16.19B |
| Dividend yieldi | 4.67% | 5.88% |
- Investment grade ratings imply low historical default rates
- Higher yield than comparable Treasuries
- Broad diversification across issuers and industries
- Much higher current income than investment grade corporates
- Shorter duration reduces exposure to interest rate moves
- Spread widening can create genuinely attractive entry points for patient investors
- Longer average duration means more interest rate sensitivity than high yield
- Spreads still widen in recessions, correlating losses with equities
- Some holdings sit at the bottom rating tier and can be downgraded below investment grade
- Defaults rise materially in recessions, permanently impairing some holdings
- Correlates with equities, so it offers little diversification
- Underlying liquidity thins in stressed markets
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