Time to Reconsider High Yield with This ETF | ETF Trends

With the Dow Jones Industrial Average heading for its fifth positive day in a row, investors could be less hesitant to dip back into high-yield bond exchange-traded funds (ETFs). So far, fund flows are showing that a risk-on sentiment is seeping back into the markets, which makes the case for investors to consider high-yield income ETFs from DWS Group.

In particular, one fund to consider is the Xtrackers High Beta High Yield Bond ETF (NYSEArca: HYUP), which seeks investment results that correspond generally to the performance, of the Solactive USD High Yield Corporates Total Market High Beta Index. The underlying index is designed to track the performance of the segment of the U.S. dollar denominated high yield corporate bond market that exhibits higher overall beta to the broader high yield corporate fixed income market.

A volatile end to 2018 no doubt elicited a risk-off sentiment that permeated throughout the capital markets, causing high-yield bond funds to experience an aggregate one-month outflow of $1.45 billion, according to data from XTF. However, investors could be turning a corner on high-yield to start 2019.

“The last two or three days have been very strong for the high-yield space,” said Jay Pestrichelli, co-founder and managing director of ZEGA Financial. “It’s not at all a clear signal by any means, but it certainly is — I think — a reduction in panic.”

When compared to other similar high yield ETFs, HYUP is tops in terms of pure yield.