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.
“In the current interest rate environment where many investors and advisors actively hunt for the dual goals of yield and mitigation of risk, we feel YPRO may help allow the flexibility to potentially achieve both objectives,” said Noah Hamman, chief executive officer of AdvisorShares, in the statement.
The new ETF will charge 1.42% per year, according to its web page.
Other well-known AdvisorShares ETFs include the AdvisorShares TrimTabs Float Shrink ETF (NYSEArca: TTFS) and the AdvisorShares Peritus High Yield ETF (NYSEArca: HYLD).
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of HYLD and TTFS.