New ETF Pairs High Yield with Active Management
December 3rd, 2010 at 2:00pm by Tom Lydon
If you’re one of the millions of investors looking for yield these days, there’s a new exchange traded fund (ETF) in which you can find it.
This week, AdvisorShares launched the Peritus High Yield ETF (NYSEArca: HYLD), the first-ever actively managed high-yield bond ETF. The fund has two goals: generating high current income along with capital appreciation.
Peritus will select a portfolio of high-yield debt securities that generate those yields via their coupons. The manager will take a value-based, active credit approach and generally steer clear of new issues. As a result of the look regulators are taking at derivatives, the fund specifically excludes them.
The actively managed fixed-income ETF space has grown by leaps and bounds in the last year. The newest ETF is another great way for investors to get exposure to a manager’s expertise in a fund that may also generate an attractive yield. Such strategies also allow bond funds to adjust according to the interest rate environment, which will become an increasing issue as the economy improves. [Junk Bond ETFs: Are They for You?]
In addition to the HYLD launch, AdvisorShares has also filed for three active ETFs that will favor a forward-looking fundamental investment process instead of weighting by market cap.
The ETFs will be:
- Madrona Forward Domestic ETF (NYSEArca: FWDD)
- Madrona Forward International ETF (NYSEArca: FWDI)
- Madrona Forward Global Bond ETF (NYSEArca: FWDB)
For investors concerned about inflation, BlackRock is bringing to market the iShares Barclays 0-5 Year TIPS Bond Fund (NYSEArca: STIP). The new fund is the only ETF that offers access to the very shortest end of the curve – 0 to 1 year.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.