An actively managed fixed income ETF strategy that we have covered in this column on several occasions since the fund’s inception back in 2010 has experienced a strong September in terms of new asset growth.
HYLD (Peritus High Yield ETF, Expense Ratio 1.35%) has seen above average trading volume for at least the past week now, including one session where more than 800,000 shares changed hands (ADV is 97,000 shares) as the fund has attracted $72 million in new assets month to date and $200 million now year to date.
With $383 million in total assets under management now, HYLD is now the largest ETF in terms of size in the AdvisorShares lineup.
Interestingly, HYLD has bucked the trend of outflows that we have largely seen in the High Yield Fixed Income space in 2013, as leading funds like JNK (SPDR Barclays High Yield Bond, Expense Ratio 0.40%) and HYG (iShares High Yield Corporate Bond, Expense Ratio 0.50%) have seen $2.9 billion and $561 million leave the funds YTD respectively.
HYLD’s impressive vault in terms of asset growth and trading volume this month is why it makes plenty of sense to keep actively managed ETF strategies on your radar, especially in niche areas of the market outside of say equity, in this case high yield corporate bonds.
Management expertise is often sought after in areas of the market that may be considered or tend to be “inefficient” at times, and HY Corporates fall right within these parameters thanks to the typical dislocation that occurs at times in bond trading land.
What advisors and portfolio managers also likely are noting at this point about HYLD is its yield north of 8%, which compares very favorably to say JNK’s and HYG’s 6.46% yield. Live track records are “everything” to some in the ETF business, and HYLD now has nearly three years of live performance and a very impressive showing in terms of net performance and relative yield thus far in 2013, so it is safe to say the fund is on more institutional radars now than ever.
How have the portfolio managers of HYLD managed to out-perform this year? Top holdings currently include issues from Petrobakken Energy (2.03%), NII Capital Corp. (1.95%), Navistar International Corp. (1.95%), Venoco Inc. (1.78%), and Innovation Ventures (1.78%), not exactly household names.
For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.
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