Schwab High Yield Bond ETF

Schwab High Yield Bond ETF (SCYB) is an index fund that holds U.S. dollar junk bonds, which are corporate bonds rated below investment grade. It tracks the ICE BofA US Cash Pay High Yield Constrained Index. Its 0.03% expense ratio is the lowest among similar high-yield funds, where the average is 0.45%. As of October 27, 2026, its trailing 12-month yield was 7.12%, paid monthly. In exchange for that income, holders take on real default risk.

• Over the year to Oct 27, 2026, SCYB returned +1.6%, 3rd of 8 among similar funds.
• Its worst full calendar year was 2024 (+6.9%); its best was 2025 (+8.3%).
• The deepest fall in its price history was 4.9% (Feb 28, 2025 to Apr 8, 2025), recovered by May 12, 2025.

As of Aug 31, 2026, the fund held 1,839 securities; the ten largest made up 2.7% of assets, and 2.92% sat in cash and money-market holdings.

The bonds mature in 5.4 years on average (weighted by size), with an average coupon of 6.61%.

• Over the three months to Aug 31, 2026, investors added a net $344.2M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.27%, -0.27%, +0.98%.

SCYB tries to match the total return of the ICE BofA US Cash Pay High Yield Constrained Index, before fees. The index holds U.S. dollar corporate bonds rated below investment grade, based on an average of Moody's, S&P and Fitch ratings. Each bond must pay a fixed coupon (its regular interest payment) in cash, have at least $250 million outstanding and have at least one year left to maturity. The index leaves out pay-in-kind bonds (which pay interest with more bonds), zero-coupon bonds, contingent capital securities and municipal bonds. It does include Rule 144A bonds. These are sold privately to large institutions and can be harder to sell.

The index updates its holdings on the last business day of each month. Schwab doesn't buy every bond in it. Instead it uses sampling: it holds a subset chosen to match the index's interest-rate sensitivity, maturities, sectors, issuer weights and credit quality. As of August 31, 2026, that came to 1,839 holdings, with an average maturity of 5.4 years and an average coupon of 6.61%. The prospectus reports portfolio turnover of 24%.

At least 80% of net assets must be in below-investment-grade bonds. Up to 20% can go elsewhere, such as Treasuries, money market funds or futures used to manage interest-rate and credit risk. The August 31, 2026 holdings report showed no derivatives.

• SCYB charges 0.03% a year, versus an average of 0.45% for the similar funds below (1st of 8, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $3 in the first year and $39 over 10 years (assuming a 5% annual return).

Its main appeal is high monthly income from a broad, very low-cost basket of junk bonds, but its credit risk means it isn't a defensive holding.

SCYB could add a high level of monthly income. Its trailing 12-month yield was 7.12% as of October 27, 2026. It is also cheap to hold: in the SEC's standard example, $10,000 invested would cost about $39 in fees over 10 years. The fund launched on July 11, 2023, so it has no record from the 2008, 2020 or 2022 downturns. Its deepest drop was 4.9%, from February 28 to April 8, 2025, and it recovered by May 12, 2025. Both of its full calendar years were positive. That short, calm history may understate the risk. In a recession, more companies default and junk bond prices can fall alongside stocks, just when a retiree may need to sell shares or draw income. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by bond funds with the closest average maturity and issuer mix (N-PORT).