Principal Active High Yield ETF (YLD)

Overview

The Principal Active High Yield ETF is an actively managed ETF focusing on high-yield corporate bonds. The ETF seeks to maximize total return by investing primarily in U.S. dollar-denominated high-yield debt securities. Asset allocation is actively managed based on market conditions and credit analysis.

Reputation and Reliability

Principal Funds is a well-established asset manager with a solid reputation. They are known for their diverse range of investment products and commitment to client service.

Management Expertise

The management team has extensive experience in fixed income investing, particularly in the high-yield space. They employ a disciplined approach to credit selection and risk management.

Goal

The primary investment goal is to seek total return, consistent with prudent investment management, through investments in high yield bonds.

Investment Approach and Strategy

Strategy: This is an actively managed ETF; it doesn't track a specific index. The strategy involves bottom-up credit analysis and top-down macroeconomic views to identify undervalued opportunities in the high-yield market.

Composition The ETF primarily holds U.S. dollar-denominated high-yield corporate bonds. It may also invest in other fixed-income securities, including government bonds and emerging market debt.

Market Share: The ETF has a moderate market share within the high-yield bond ETF category.

Total Net Assets (AUM): 78700000

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 bond ETF market is competitive, dominated by passively managed ETFs like HYG and JNK. Principal Active High Yield ETF differentiates itself through active management, aiming for superior returns through credit selection. A disadvantage is its higher expense ratio compared to passive competitors. Its advantages include active portfolio adjustments based on market conditions and focused risk management, aiming for enhanced returns and lower volatility.

Historical Performance: Historical performance data is unavailable in this response.

Benchmark Comparison: Benchmark comparison data is unavailable in this response.

Expense Ratio: 0.5

Average Trading Volume

The average trading volume is moderate, which means it can be traded without significant price impact under normal market conditions.

Bid-Ask Spread

The bid-ask spread is typically tight, suggesting relatively low transaction costs.

Market Environment Factors

Economic growth, interest rate movements, and credit spreads influence the ETF's performance. Higher interest rates can negatively impact bond prices, while economic growth typically supports credit quality.

Growth Trajectory

The ETF's growth is dependent on its ability to outperform its benchmark and attract assets. Changes to strategy and holdings are actively managed to adapt to market conditions.

Competitive Edge

Principal Active High Yield ETF's competitive edge lies in its active management approach, focusing on rigorous credit analysis and risk management. This active strategy aims to capitalize on market inefficiencies and deliver superior risk-adjusted returns compared to passive high-yield ETFs. The management team's experience and disciplined investment process contribute to its ability to navigate the complexities of the high-yield market. Finally, it provides access to high-yield bonds through an ETF structure with daily liquidity.

Volatility

Historical volatility is moderate, reflecting the inherent volatility of high-yield bonds.

Market Risk

The ETF is subject to market risk, including interest rate risk, credit risk, and liquidity risk. Credit risk is particularly important given its focus on high-yield bonds, which are more likely to default than investment-grade bonds.

Ideal Investor Profile

The ideal investor is one seeking income and potential capital appreciation through exposure to high-yield bonds. They should understand the risks associated with high-yield debt, including credit risk and interest rate risk.

Market Risk

This ETF is suitable for long-term investors seeking income, but it's also appropriate for active traders looking to capitalize on short-term market movements in the high-yield space.

The Principal Active High Yield ETF offers exposure to the high-yield corporate bond market through an actively managed strategy. This active approach seeks to deliver superior returns by carefully selecting bonds and managing risk based on market conditions. While it carries risks inherent in high-yield debt, its potential for higher income makes it suitable for income-seeking investors. The ETF's performance depends on the manager's skill in navigating the complexities of the high-yield market and successfully managing credit and interest rate risks. Its AUM is relatively small and expense ratio is higher than its passively managed peers.

Data Sources:

• Principal Funds Website
• ETF.com
• Morningstar

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investors should consult with a qualified financial advisor before making any investment decisions.