“Low-volatility investment strategies have been successfully applied to stocks for years, but it is more challenging to apply the concept to the bond market,” according to Morningstar. “Bonds are more thinly traded than stocks, and stale prices can bias volatility downward, where more illiquid bonds may appear to be safer. Volatility also declines as bonds approach maturity, so past volatility may overstate a bond’s likely future volatility.”

HYLV tracks the the S&P U.S. High Yield Low Volatility Corporate Bond Index, which is comprised of U.S. dollar-denominated high-yield corporate bonds that have been selected using a rules-based methodology that identifies securities expected to have a lower volatility relative to the broader high-yield market.

At the end of the third quarter, HYLV had a 30-day SEC yield of 3.61%. About 84% of the ETF’s holdings are rated BB+, BB or BB-. HYLV has only scant exposure to speculative CCC-rated debt.

For more information on the credit market, visit our bond ETFs category.