First Trust Tactical High Yield ETF (HYLS)

Overview

The First Trust Tactical High Yield ETF (HYLS) seeks to provide current income. It employs a tactical strategy, investing primarily in high-yield corporate bonds and other income-producing securities. The strategy aims to capitalize on market opportunities and manage risk through active allocation decisions.

Reputation and Reliability

First Trust is a well-established ETF issuer known for its innovative investment strategies and consistent performance.

Management Expertise

First Trust has a dedicated team of investment professionals with extensive experience in managing fixed-income portfolios.

Goal

To provide current income.

Investment Approach and Strategy

Strategy: The ETF does not track a specific index but employs an active, tactical strategy.

Composition The ETF primarily holds high-yield corporate bonds, but can also invest in other income-producing securities, including preferred stocks, convertible bonds, and bank loans.

Market Share: HYLS's market share within the high-yield ETF space is notable, but not dominant.

Total Net Assets (AUM): 773500000

Key Competitors

• iShares iBoxx High Yield Corporate Bond ETF (HYG)
• SPDR Bloomberg High Yield Bond ETF (JNK)
• VanEck High Yield Muni ETF (HYD)

Competitive Landscape

The high-yield ETF market is competitive, with several large players. HYLS differentiates itself through its tactical approach, offering flexibility in asset allocation. Competitors like HYG and JNK offer broader, more passive exposure, while HYLS seeks to outperform through active management, potentially leading to higher returns but also higher risk. HYD focuses on Municipal Bonds which is Tax Exempt

Historical Performance: Past performance is not indicative of future results and can vary significantly depending on market conditions.

Benchmark Comparison: Due to its active strategy, the ETF's performance is best compared to a high-yield bond index but will deviate based on tactical decisions.

Expense Ratio: 0.85

Average Trading Volume

The ETF's average trading volume indicates adequate liquidity for most investors.

Bid-Ask Spread

The bid-ask spread is typically reasonable, reflecting the ETF's liquidity.

Market Environment Factors

Economic growth, interest rate changes, and credit spreads significantly impact HYLS, affecting the value of its high-yield bond holdings.

Growth Trajectory

HYLS's growth depends on its ability to generate alpha through tactical asset allocation within the high-yield market. Changes in the strategy and holdings will directly affect the ETF.

Competitive Edge

HYLS's competitive edge lies in its tactical approach, allowing it to adapt to changing market conditions. The active management style seeks to outperform passive high-yield ETFs by identifying and capitalizing on opportunities in the high-yield market. This flexibility allows for adjusting the portfolio based on macroeconomic trends, credit risk assessment, and relative value analysis. However, tactical management may introduce greater risk than passive strategies.

Volatility

High-yield bonds are inherently more volatile than investment-grade bonds. HYLS will reflect this volatility.

Market Risk

HYLS is susceptible to interest rate risk, credit risk, and liquidity risk, which can negatively impact its performance.

Ideal Investor Profile

The ideal investor is seeking current income and is willing to accept a moderate level of risk. This includes income-seeking investors and those looking to diversify their fixed-income portfolio.

Market Risk

HYLS is suitable for long-term investors seeking income and willing to tolerate moderate risk, and those who believe in active management.

First Trust Tactical High Yield ETF (HYLS) aims to generate current income through active management of high-yield bonds. Its tactical strategy offers flexibility but introduces additional risk. The ETF suits investors seeking income and comfortable with moderate volatility, but it's important to consider its active management compared to passively managed high yield alternatives. Overall, HYLS provides diversification benefits and potential for higher returns, but due diligence on the manager's strategy is essential.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Market data and information can change rapidly and may not always be accurate.