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Active High-Yield Bond ETF Rakes in Cash After Fed Decision


An actively managed ETF for high-yield bonds that has been outperforming its index-linked rivals this year saw heavy inflows Wednesday after the Federal Reserve decided not to taper its bond and mortgage purchases.

AdvisorShares Peritus High Yield ETF (HYLD) has posted a total return of about 9% year to date, which doubles the performance of SPDR Barclays Capital High Yield Bond ETF (JNK) and and iShares iBoxx $ High Yield Corporate Bond ETF (HYG).

HYG and JNK are the largest ETFs indexed to corporate junk bonds. The two funds have experienced net outflows in 2013, but actively managed HYLD has seen cash move in the door.

HYLD has grown to about $338 million of assets. The ETF launched in November 2010. [High-Yield Bonds: Active ETF Bucks Outflow Trend]

On Wednesday, HYLD “had some really nice inflows late in the day” after the Fed announcement, said Chris Hempstead, director of ETF execution services at WallachBeth Capital.

Bond ETFs rallied Wednesday as interest rates dropped sharply in the wake of the Fed’s no-taper decision.

In fact, HYLD experienced record trading volume on Wednesday, more than doubling the previous high.

AdvisorShares Peritus High Yield ETF

Full disclosure: Tom Lydon’s clients own HYG and JNK.

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