AdvisorShares, one of the largest issuers of actively managed ETFs, will introduce the AdvisorShares YieldPro ETF (NasdaqGM: YPRO) today.
YPRO is an ETF “fund of funds” that holds both long and short fixed income investments. The new ETF will be advised California-based registered investment advisory firm The Elements Group (TEG), which is also the advisor for the AdvisorShares EquityPro ETF (NYSEArca: EPRO).
“In YPRO’s structured investment process, TEG will pursue attractive yield and manage volatility through a quantitative approach to risk budgeting, which also includes the use of options to hedge residual equity and interest rate risk as needed. YPRO’s combination of portfolio construction, risk budgeting, and hedging seeks to provide less volatility, low correlations to equity market risk, and the flexibility to manage interest rate risk,” according to a statement.
YPRO’s managers screen bond ETFs, using factors such as yield, volatility profile, volume and relative strength, “in order to seek diversification across multiple fixed income segments, while also seeking to maximize yield while targeting a lower level of risk.”
Using a bottom up approach, YPRO’s managers look to damp volatility by assigning risk budgets to bond funds. As an actively managed ETF, YPRO has the ability to establish a market neutral position in times of elevated bond market volatility.