Virtus ETF Trust Stone Harbor Emerging Markets High Yield Bond ETF (VEMY)

Overview

The Virtus ETF Trust Stone Harbor Emerging Markets High Yield Bond ETF (EMHY) focuses on providing investors with exposure to high-yield debt instruments issued by companies and governments in emerging market countries. Its strategy involves active management to select bonds that offer attractive risk-adjusted returns, emphasizing credit research and macro-economic analysis. The target sector is primarily emerging market corporate and sovereign debt.

Reputation and Reliability

Virtus Investment Partners is a well-established asset management firm with a reputation for providing diverse investment solutions. Stone Harbor Investment Partners, the sub-advisor, is known for its expertise in emerging markets debt.

Management Expertise

The ETF is managed by Stone Harbor Investment Partners, a team with extensive experience and a dedicated focus on emerging markets debt, known for their deep credit research and macro-economic analysis capabilities.

Goal

The primary investment goal of EMHY is to seek total return, which includes current income and capital appreciation, from investments in a diversified portfolio of emerging markets high-yield debt securities.

Investment Approach and Strategy

Strategy: EMHY is an actively managed ETF that does not track a specific index. The portfolio managers actively select securities based on their creditworthiness, yield potential, and macroeconomic outlook for emerging markets.

Composition The ETF primarily holds a diversified portfolio of emerging market corporate and sovereign bonds with a high-yield credit rating (below investment grade). It may also invest in other debt instruments, including floating rate debt and instruments of companies with significant business ties to emerging market countries.

Market Share: Specific market share data for EMHY within the emerging markets high-yield ETF sector is not readily available, but it is a notable player within its niche.

Total Net Assets (AUM): 450000000

Key Competitors

• iShares J.P. Morgan USD Emerging Markets High Yield Bond ETF (EMHY)
• VanEck J.P. Morgan EM Local Currency Bond ETF (EMLC)
• Invesco Emerging Markets Sovereign Debt ETF (PCW)

Competitive Landscape

The emerging markets high-yield bond ETF landscape is competitive, with several large players offering similar exposures. EMHY's advantage lies in its active management by Stone Harbor, which aims to outperform passive benchmarks through rigorous credit selection and macroeconomic analysis. A potential disadvantage could be higher fees compared to passive ETFs and the inherent risks associated with actively managed funds.

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Benchmark Comparison: EMHY typically aims to outperform a custom benchmark or a blended benchmark reflecting emerging markets high-yield debt. Its performance relative to benchmarks can vary based on market conditions and the effectiveness of active management.

Expense Ratio: 0.65

Average Trading Volume

The ETF exhibits moderate average daily trading volume, suggesting reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread for EMHY is generally tight enough for typical retail investor trades, reflecting adequate market depth.

Market Environment Factors

Factors influencing EMHY include global interest rate movements, inflation in emerging markets, geopolitical stability, commodity prices, and the economic growth prospects of emerging economies. Shifts in currency valuations also play a significant role.

Growth Trajectory

The ETF's growth trajectory is tied to the broader emerging markets debt market's performance and investor appetite for higher-yielding, albeit riskier, assets. Changes in strategy are driven by the sub-advisor's evolving market outlook and credit research.

Competitive Edge

EMHY's competitive edge stems from the deep expertise of Stone Harbor Investment Partners in navigating the complexities of emerging markets debt. Their active management approach, focusing on in-depth credit analysis and macroeconomic insights, seeks to identify undervalued opportunities and manage risk effectively in a volatile asset class. This dedicated focus and specialized knowledge differentiate it from passive investment vehicles.

Volatility

EMHY exhibits higher historical volatility compared to investment-grade bond ETFs, reflecting the inherent risks of emerging markets and high-yield debt.

Market Risk

Specific market risks include credit risk (default by issuers), interest rate risk, currency risk (fluctuations in emerging market currencies), political risk, and liquidity risk. Emerging markets debt is generally considered riskier than developed markets debt.

Ideal Investor Profile

The ideal investor for EMHY is one with a higher risk tolerance, seeking enhanced income and potential capital appreciation from emerging markets. They should have a long-term investment horizon and understand the volatility associated with high-yield and emerging market debt.

Market Risk

EMHY is best suited for long-term investors who are willing to accept higher levels of risk for potentially higher returns and for those seeking to diversify their fixed-income portfolio with exposure to emerging markets.

The Virtus ETF Trust Stone Harbor Emerging Markets High Yield Bond ETF (EMHY) offers actively managed exposure to the high-yield debt of emerging market countries. Managed by Stone Harbor, it aims for total return through credit selection and macro analysis. While it provides higher yield potential, it also comes with elevated volatility and risks characteristic of emerging markets and sub-investment grade debt. It is suitable for risk-tolerant, long-term investors seeking diversification and income.

Data Sources:

• Virtus Investment Partners Official Website
• Financial Data Providers (e.g., Morningstar, ETF.com)
• Industry Analysis Reports

Disclaimers:

This information is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investors should conduct their own research and consult with a financial advisor before making investment decisions.