“High-yield spreads are tighter than they have been over the last three years,” Jablonski said. “We believe that a more defensive in high yield is appropriate. In our ETF ticker YLD, we have essentially de-risked some of our income generating options there to prepare high yield investors for essentially what could be a troubling, potentially volatile 2017.”
The Principal EDGE Active Income ETF (NYSEArca: YLD) is an actively managed multi-asset fund. Multi-asset exchange traded funds have provided diversified exposure to a group of various asset classes and generated attractive yields and have become income investor favorites as advisors and investors searched for new yield sources amid several years of rock-bottom U.S. interest rates.
YLD seeks to generate consistent income through changing market environments and over market cycles. It invests opportunistically across a diversified range of income-generating asset classes while managing for risk. EDGE’s proven investment process, long history of income investing, and strong risk management and credit research capabilities may help enhance returns while reducing risks.
“We believe that active management works,” Jablonski said. “Despite the struggles that active have had, we think the key to long-term active success is having a long horizon. Therefore, we keep our turnover of YLD at less than twenty percent, which means each name, you have to be a five-year idea.”