“We put in a full basket of Alpha generating Floating Rate Loans (20%), a bucket of New Issue Bonds (tough to get allocations but 25 years in HY market help) and roughly half of the portfolio remains our Alpha Bond picks,” Heller told ETF Trends. “This has allowed us a more diverse portfolio that has dampened volatility and yet allows us to add significant Alpha.”
Specifically, as of the end of March, HYLD’s portfolio included oil E&P 11%, misc. manufacturing 2%, mining 2%, homebuilding & construction 1%, machinery diversified 3%, healthcare 5%, gas 1%, forest products & paper 2%, coal 3%, iron/steel 1%, entertainment & leisure 1%, electronics 3%, diversified financial services 4%, energy alternative & propane 3%, computer parts 2%, misc consumer products 1%, storage/warehouse 1%, oil & gas drilling/services 5%, pipelines 2%, retail & restaurants 5%, REITs 1%, telecom 7%, transportation 3%, advertising medea 4%, aerospace defense 1%, agriculture 1%, auto manufacturing & parts 1%, beverage & food 9%, biotech & pharma 5% and chemicals 3%.
However, potential investors should be aware that this active junk bond ETF comes with slightly greater credit risk when compared to its passive competitors. HYLD’s portfolio includes 10.0% B-rated debt, 61.6% B and 22.8% C.
For more information on the fixed-income market, visit our bond ETFs category.