Have you heard? Bonds are back, with rising rates positioning debt securities from all sorts of subsectors to provide notable yields and long term stability for portfolios beleaguered by the prospect of a looming recession. Investors have their pick across the bond spectrum, with three notable bond ETFs for 2023 available from American Century.
The American Century Select High Yield ETF (AHYB)
Those investors looking for some high yield opportunities while markets still wait for added clarity from the Fed might want to consider AHYB. The actively managed ETF invests broadly in high-yield corporate debt rated BB or B, typically in bonds with 3-to-10-year maturities.
AHYB charges a 45 basis point fee, having seen its returns increase in the last month compared to its three month returns, 2.7% to 1.8%. The ETF has tied the Factset Segment Average in one and three month performance, as well. AHYB has managed to operate with relatively low volatility, with just 21.9% volatility over the last five days.
The American Century Diversified Corporate Bond ETF (KORP)
KORP is also actively managed, targeting investment-grade corporate debt but adding in some lower-rated, junk quality debt in for diversification. However, KORP overall invests in holdings with significantly lower credit quality than the Blomberg Barclays U.S. Intermediate Corporate Bond Index.
Charging 29 basis points for its exposures, a somewhat reasonable price compared to other active fixed income strategies. KORP has seen its returns jump in the lats month compared to the last three months as well, from -0.3% to 3.1%, outperforming the Factset Segment Average by 0.8% over one month. The strategy has also added $2.3 million in net inflows, but with more volatility than AHYB over the last five days with 35%.
The Avantis Short-Term Fixed Income ETF (AVSF)
AVSF comes from American Century’s Avantis brand, and also actively invests. AVSF eyes short term, broad-based investment grade bonds for its holdings. Investing in both U.S. and non-U.S. issuers, it can choose among government and corporate bonds, using an analytical framework to identify those bonds with high expected returns with other factors like credit rating, currency, duration, and industry sector.
AVSF aims for an average maturity of three years, adding in credit default swaps and total return swaps. The bond ETF has returned 1.5% over one month, beating the Factset Segment Average by about 0.2%. The strategy, which charges just 15 basis points, has taken in a notable $41 million in net inflows over the last month.
Choosing among bond ETFs for 2023 is front and center for advisors and investors alike as the year draws to a close. For investors on the lookout for a manager with a suite of options in the fixed income space, consider this trio for some interesting options.
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