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ETF Chart of the Day: Jumping for Junk


We periodically highlight actively managed ETFs in this piece and have been since 2009 because we believe that they have legs in terms of future asset growth potential.

Does every actively managed strategy immediately take off in terms of gathering assets and attracting the interest of asset managers and financial advisors?

The answer is an unequivocal no, at least based on the evidence that we have seen thus far, but that does not mean that as funds reach live performance benchmarks (3 year, 5 year, and so on), as well as ratings from companies like Morningstar, that the picture cannot dramatically change in short order in terms of fund sizes and momentum.

Take HYLD (Peritus High Yield ETF, Expense Ratio 1.25%) for example. The fund debuted in late 2010, and obviously has recently crossed its three year live performance benchmark as well as attaining a five star rating from Morningstar which cannot hurt asset raising efforts, and has grown from a little known fund to approximately $473 million in assets under management.

In fact, the fund which relies on the active selection of high yield corporate bond issues traded huge volume yesterday (in comparison to its average daily number of about 109,000 shares) as it registers a new all-time product price high this morning.

The High Yield Corporate Bond ETP space is unquestionably a net winner in terms of its displayed ability to attract assets over time, as HYG (iShares High Yield Yield Corporate Bond, Expense Ratio 0.50%) the largest fund in the segment, has gathered $14.86 billion in assets under management to date, and is followed by some other larger funds in JNK (SPDR Barclays Capital High Yield Bond, Expense Ratio 0.40%), HYS (PIMCO 0-5 Year U.S. High Yield Corporate Bond, Expense Ratio 0.55%), and SJNK (SPDR Barclays Capital Short Term High Yield Bond, Expense Ratio 0.40%), which collectively have about $17 billion in assets under management across them.

Again we emphasize the very important difference in HYLD in that it is actively managed compared to what are mostly straight index approaches in the HY Corporate Bond space. It seems that the active management aspect, and the impressive performance since inception coupled with an appealing yield (7.87%) has made HYLD a force, as it is the 10th largest fund now in asset size in the HY Corporate Bond space.

AdvisorShares Peritus High Yield ETF

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

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