On the heels of its short-duration junk bond ETF launch, Deutsche Asset Management expanded on its fixed-income line with two more high-yield bond ETF strategies.
On Thursday, Deustche Asset Management launched the Xtrackers High Beta High Yield Bond ETF (NYSEArca: HYUP) and Xtrackers Low Beta High Yield Bond ETF (NYSEArca: HYDW), which have a 0.35% and 0.25% expense ratio, respectively.
HYUP offers investors access to speculative-grade higher beta bonds, while HYDW provides access to lower beta bonds.
Specifically, the Xtrackers High Beta High Yield Bond ETF tries to reflect the performance of the Solactive USD High Yield Corporates Total Market High Beta Index, which includes the high-yield corporate bond market that exhibits higher overall beta to the broader high yield corporate bond market. Beta is a measure of a security’s sensitivity or volatility and reflects the rate of change in a security’s price that results from overall market moves. Higher yielding securities also tend to exhibit higher beta.
Meanwhile, the Xtrackers Low Beta High Yield Bond ETF tries to reflect the performance of the Solactive USD High Yield Corporates Total Market Low Beta Index, which includes junk-rated debt that exhibits lower overall beta to the broader high-yield bond market. Consequently, the portfolio is comprised of lower-yielding junk bonds that show a lower beta.
“In today’s low interest rate environment, fixed income investors are looking for new sources of yield,” Fiona Bassett, Head of Passive Asset Management, Americas, said in a note. “Our expanded Xtrackers suite of high yield bond ETFs uses rules-based strategies to provide exposure to different levels of credit and interest rate risk, allowing investors to manage credit and duration exposure for a more customized solution. SHYL will allow investors to gain cost efficient exposure specifically to the short duration high yield bonds. In addition, the unique construction methodology of HYUP and HYDW may help investors achieve their desired level of yield and credit risk while maintaining varied exposure to the underlying high yield market.”
The two new ETFs followed the Wednesday launch of the Xtrackers Short Duration High Yield Bond ETF (NYSEArca: SHYL).
For more information on new fund products, visit our new ETFs category.