Principal Active High Yield ETF (YLD)

Overview

The Principal Active High Yield ETF (HYLB) is an actively managed ETF that seeks to provide a high level of current income by investing primarily in high-yield corporate bonds. It aims to outperform a high-yield benchmark index through active security selection and risk management.

Reputation and Reliability

Principal Funds is a well-established asset manager with a long track record of providing investment solutions. They are considered reliable and have a solid reputation.

Management Expertise

The management team for HYLB possesses extensive experience in high-yield bond investing and active portfolio management.

Goal

The primary investment goal is to seek a high level of current income.

Investment Approach and Strategy

Strategy: The ETF employs an active management strategy, focusing on bottom-up security selection within the high-yield bond market.

Composition The ETF primarily holds high-yield corporate bonds. The portfolio may also include other fixed-income securities and derivatives to manage risk or enhance returns.

Market Share: HYLB's market share within the high-yield bond ETF category is moderate.

Total Net Assets (AUM): 623000000

Key Competitors

• iShares iBoxx High Yield Corporate Bond ETF (HYG)
• SPDR Bloomberg High Yield Bond ETF (JNK)
• VanEck Fallen Angel High Yield Bond ETF (ANGL)

Competitive Landscape

The high-yield bond ETF market is competitive, dominated by larger, passively managed ETFs like HYG and JNK. HYLB's active management strategy aims to differentiate it, potentially offering higher returns but also introducing manager risk. Its smaller AUM can be a disadvantage in terms of liquidity and brand recognition compared to larger competitors.

Historical Performance: Past performance is not indicative of future results. Refer to official fund documentation for performance data.

Benchmark Comparison: Performance should be compared to a relevant high-yield bond index such as the ICE BofA US High Yield Index.

Expense Ratio: 0.55

Average Trading Volume

The ETF's average trading volume indicates moderate liquidity, which allows for relatively easy buying and selling of shares.

Bid-Ask Spread

The bid-ask spread is generally tight, reflecting sufficient liquidity and lower transaction costs for investors.

Market Environment Factors

Economic growth, interest rate levels, credit spreads, and corporate earnings influence HYLB's performance. Risk sentiment also plays a vital role.

Growth Trajectory

HYLB's growth depends on its ability to generate alpha through active management and attract investors seeking high yield in a low-interest-rate environment. Flows can be affected by changes in investor sentiment and credit market conditions.

Competitive Edge

HYLB's primary advantage is its active management approach, allowing for dynamic adjustments to the portfolio based on market conditions and security-specific analysis. The ETF's management team has the flexibility to overweight or underweight sectors and issuers based on their outlook. This contrasts with passively managed high-yield ETFs that simply track an index. The ETF seeks to identify undervalued securities and avoid those with higher risk of default, potentially leading to superior risk-adjusted returns.

Volatility

HYLB's volatility is typical of high-yield bond funds, reflecting the credit risk associated with the underlying bonds.

Market Risk

The ETF is subject to market risk, including interest rate risk, credit risk, and liquidity risk. Downturns in the economy or credit markets could negatively impact the fund's performance.

Ideal Investor Profile

The ideal investor is one seeking high current income and willing to accept a moderate level of risk associated with high-yield bonds. Investors looking to diversify their fixed income portfolio may also find this ETF suitable.

Market Risk

HYLB is suitable for long-term investors who understand the risks and rewards of high-yield bond investing and are seeking current income. It is less suitable for risk-averse investors or those with a short-term investment horizon.

Principal Active High Yield ETF (HYLB) is an actively managed ETF designed to generate high current income by investing in high-yield corporate bonds. Its active management approach distinguishes it from passive high-yield ETFs, offering the potential for outperformance but also introducing manager risk. The ETF is suitable for investors seeking income and willing to tolerate moderate credit risk. Market conditions, credit spreads, and interest rates will significantly impact its performance. Investors should consider their risk tolerance and investment objectives before investing.

Data Sources:

• Principal Funds Website
• ETF.com
• Morningstar

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. Consult with a qualified financial advisor before making any investment decisions.