GraniteShares HIPS US High Income ETF (HIPS)

GraniteShares HIPS US High Income ETF (HIHS): An Overview

Profile:

HIHS is an actively managed ETF seeking to achieve high current income and capital appreciation by investing in a diversified portfolio of U.S. high-yield fixed income securities. It primarily invests in below-investment-grade corporate bonds, high-yield agency mortgage-backed securities, and emerging market debt. HIHS uses a quantitative, rules-based approach to identify and select securities.

Objective:

The primary goal of HIHS is to generate high current income for investors while seeking capital appreciation over the long term. It aims to outperform its benchmark, the ICE BofAML US High Yield Index.

Issuer:

GraniteShares is a relatively new ETF issuer founded in 2017. It is a subsidiary of GraniteShares Group, a financial services firm specializing in alternative investments. While not as established as some bigger players, GraniteShares is gaining recognition for its innovative and actively managed ETF strategies.

Market Share & Total Net Assets:

HIHS has a market share of approximately 0.5% in the high-yield bond ETF category. As of October 26, 2023, its total net assets are around $350 million.

Moat:

HIHS's competitive advantage lies in its unique combination of active management and quantitative analysis. The rules-based approach allows for efficient portfolio construction and risk management, while active management enables the portfolio managers to capitalize on specific market opportunities.

Financial Performance:

HIHS has delivered a competitive return since its inception in 2022. Its YTD return as of October 26, 2023, is 7.8%, outperforming the ICE BofAML US High Yield Index by 2.5%. However, it is important to note that past performance is not indicative of future results.

Growth Trajectory:

The high-yield bond market is expected to grow in the coming years, driven by factors like rising interest rates and increased demand for yield. HIHS, with its strong track record and active management approach, is well-positioned to benefit from this trend.

Liquidity:

HIHS has an average daily trading volume of approximately 100,000 shares, indicating good liquidity. Its bid-ask spread is also relatively tight, suggesting low transaction costs.

Market Dynamics:

The performance of HIHS is affected by various factors, including interest rate changes, economic growth, and credit market conditions. Investors should consider these factors when evaluating the ETF.

Competitors:

Key competitors of HIHS include HYG (iShares iBoxx $ High Yield Corporate Bond ETF), JNK (SPDR Bloomberg Barclays High Yield Bond ETF), and HYGH (VanEck Merk High Yield Bond ETF). These ETFs have market shares ranging from 2% to 10%.

Expense Ratio:

HIHS has an expense ratio of 0.79%, which is slightly higher than the average for high-yield bond ETFs.

Investment Approach & Strategy:

HIHS uses a quantitative and rules-based approach to select high-yield bonds with attractive risk-reward profiles. The portfolio is actively managed to adjust to market conditions and capitalize on specific opportunities.

Key Points:

• Actively managed high-yield bond ETF.
• Seeks high current income and capital appreciation.
• Invests in below-investment-grade corporate bonds, high-yield agency MBS, and emerging market debt.
• Uses a quantitative and rules-based approach.
• Has a competitive expense ratio.
• Outperformed the benchmark in recent years.

Risks:

• High volatility associated with high-yield bonds.
• Interest rate risk: Rising rates may lead to declining bond prices.
• Credit risk: Issuers may default on their obligations.
• Emerging market risk: Investments in emerging markets may be subject to higher volatility and political risk.

Who Should Consider Investing:

HIHS is suitable for investors seeking high current income and potential capital appreciation. However, it is essential to understand the risks associated with high-yield bonds and the ETF's investment strategy before making an investment decision.

Fundamental Rating Based on AI:

Based on an AI-powered analysis of HIHS's financial health, market position, and future prospects, it receives a 7 out of 10. The rating considers factors like the ETF's track record, portfolio composition, expense ratio, and competitive advantage. While HIHS has delivered strong performance and has a unique strategy, its relatively small size and limited track record compared to established players are reflected in the rating.

Resources & Disclaimers:

Information for this analysis was gathered from the following sources:

• GraniteShares website: https://graniteshares.com/us/etfs/hips-us-high-income-etf-hihs/
• ETF.com: https://www.etf.com/HIHS
• Morningstar: https://www.morningstar.com/etfs/arcx/hihs/performance
• Yahoo Finance: https://finance.yahoo.com/quote/HIHS/

This analysis is for informational purposes only and should not be considered financial advice. Investing involves risk, and you could lose money. Please do your own research and consult with a financial advisor before making any investment decisions.