High-Yield Bond ETF Paying 8% Takes Active Approach

There has been a lot of speculation lately about whether the strong bull run in high-yield corporate bond ETFs is due for a steeper correction with yields sitting near all-time lows. Also, some ETF investors are wondering whether active management can provide a defensive edge versus an index-based approach.

By simply buying a high yield index fund, an investor may end up with too much exposure to lower rated segments of the market. Active management allows for professional management and the ability to focus on certain segments of the market. For investors considering high-yield bond funds, a fund that sticks with higher-rated high yield bonds, and limits exposure to lower-rated bonds could be the best option.

Peritus High Yield (NYSE: HYLD) is an actively managed ETF strategy that debuted in December of 2010.

Instead of following passive benchmarks designed to mirror the U.S. High Yield Corporate market, HYLD employs an actively managed approach that seeks the right mix of individual corporate bond issues.  Peritus takes a value-based, active credit approach to the markets, largely foregoing new issue participation, favoring instead the secondary market where Peritus believes there is less competition and more opportunities for capital gains. Peritus de-emphasizes relative value in favor of long-term, absolute returns.

Source:  Paul Weisbruch, Street One Financial

HYLD is a component of the D2 Capital Management Multi-Asset Income Portfolio.

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

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