As the Federal Reserve enacts aggressive monetary policies to stabilize the economy, fixed-income investors are faced with a lower-for-longer yield environment.
In the upcoming webcast, High Yield: Strategies for Volatile Markets, Marc Pfeffer, Chief Investment Officer, CLS Investments; Stephen Blumenthal, Executive Chairman and Chief Investment Officer, CMG Capital Management Group; Sonja Hildebrandt, Vice President | Co-Head CIO Office, DWS; and Sean Edkins, Head of ETF Sales and Strategic Partnerships, DWS, will explore ways to find income in this new zero-bound world, and look to targeted strategies that could help enhance a traditional fixed-income portfolio.
For instance, Deutsche Asset Management has come out with the Xtrackers High Beta High Yield Bond ETF (NYSEArca: HYUP) and Xtrackers Low Beta High Yield Bond ETF (NYSEArca: HYDW) to help investors reduce or increase the risk they are comfortable with in the high-yield segment. 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.
The two ETFs combined would mirror the portfolio of the broader Xtrackers USD High Yield Corporate Bond ETF (HYLB).
For those more concerned about interest rate risk, the Xtrackers Short Duration High Yield Bond ETF (NYSEArca: SHYL) goes down the yield curve to cover speculative-grade debt with shorter durations or lower sensitivities to changes in interest rates.
Additionally, the Deutsche X-trackers High Yield Corporate Bond – Interest Rate Hedged ETF (Cboe: HYIH) is designed specifically to keep investors engaged with high-yield corporate bonds while mitigating interest rate risk. HYIH seeks to track the performance, before fees and expenses, of the Solactive High Yield Corporate Bond – Interest Rate Hedged Index, which aims to mitigate exposure of interest rate sensitivity across the yield curve in a rising rate environment
Financial advisors who are interested in learning more about high-yield strategies can register for the Wednesday, April 29 webcast here.