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HYG/TLT continues to trade well, but can we do better than HYG?

In July, I said I liked the idea of a long HYG/TLT trade. Historically speaking, high yield tends to be a bad place to be. High yield tends to be desperate borrowers - and has negative selection bias - the biggest borrowers tend to be the worst credits. Think subprime borrowers in the run up to GFC. But in a pro-labour world, nominal growth should be good meaning high yield defaults will be lower than expected. The real problem is that interest rates will rise, but the higher yield on HYG and shorter duration protect you from this. This trade idea has continued to do very well. It is back to near 10 year highs.

What exactly is HYG and could we do better ourselves, rather than using an ETF? (Below is paywalled, but sign up to my other substack - - for a free 7 day trial)

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Capital Flows and Asset Markets
Russell Clark