Xtrackers Low Beta High Yield Bond ETF (HYDW)HYDW

Xtrackers Low Beta High Yield Bond ETF (HYLB) Overview

Profile:

HYLB is a passively managed exchange-traded fund (ETF) offered by DWS Investment Management Americas Inc. It tracks the ICE BofAML US High Yield Low Beta Total Return Index, providing broad exposure to the U.S. high-yield bond market with a focus on low-beta bonds. These bonds offer less volatility than the broader high-yield market while still offering attractive yields. HYLB invests primarily in corporate bonds rated below investment grade (BB and below) and has an average maturity of 3-5 years.

Objective:

The primary investment goal of HYLB is to provide investors with a high level of current income while limiting downside risk compared to the broader high-yield market.

Issuer:

• DWS Investment Management Americas Inc. is a subsidiary of DWS Group, a global asset management firm with over €800 billion in assets under management.
• DWS is highly reputable and has a strong track record in managing fixed income investments.
• The ETF is managed by an experienced team of portfolio managers with expertise in high-yield bonds.

Market Share:

HYLB has a market share of approximately 1.5% within the high-yield bond ETF category.

Total Net Assets:

HYLB has total net assets of approximately $1.5 billion.

Moat:

• Low Beta Focus: HYLB's focus on low-beta bonds provides investors with a more stable income stream compared to traditional high-yield bond ETFs.
• Experienced Management: The ETF is managed by a team of experienced portfolio managers with a proven track record in the high-yield bond market.
• Liquidity: HYLB is a highly liquid ETF, with an average trading volume of over 1 million shares per day.

Financial Performance:

• Since inception (March 2015): HYLB has delivered an annualized return of 5.6%.
• Recent Performance: HYLB has outperformed the broader high-yield bond market in recent years, with a return of 4.2% in 2022 compared to the negative return of the ICE BofAML US High Yield Index.

Growth Trajectory:

HYLB's growth trajectory is expected to be positive due to the growing demand for income-generating investments and the increased focus on risk management among investors.

Liquidity:

• Average Trading Volume: 1 million shares per day.
• Bid-Ask Spread: 0.10%

Market Dynamics:

• Rising Interest Rates: Interest rate hikes can negatively impact the value of high-yield bonds.
• Economic Growth: A strong economy can lead to increased demand for high-yield bonds.
• Inflation: Inflation can erode the value of fixed income investments.

Competitors:

• iShares iBoxx $ High Yield Corporate Bond ETF (HYG): 50% market share.
• SPDR Bloomberg Barclays High Yield Bond ETF (JNK): 25% market share.

Expense Ratio:

HYLB has an expense ratio of 0.35%.

Investment approach and strategy:

• Strategy: Tracks the ICE BofAML US High Yield Low Beta Total Return Index.
• Composition: Invests primarily in corporate bonds rated below investment grade (BB and below).

Key Points:

• Provides high current income with lower volatility than the broader high-yield market.
• Managed by an experienced team with a proven track record.
• Highly liquid ETF.

Risks:

• Credit Risk: Bonds may default on their payments.
• Interest Rate Risk: Rising interest rates can decrease the value of the ETF.
• Market Risk: The ETF's value can fluctuate based on market conditions.

Who Should Consider Investing:

HYLB is suitable for investors seeking high current income and lower volatility than the broader high-yield bond market. It is also appropriate for investors with a longer-term investment horizon.

Fundamental Rating Based on AI:

8.5 out of 10

HYLB has a strong overall fundamental rating based on its low-beta focus, experienced management team, and robust financial performance. However, investors should be aware of the potential risks associated with high-yield bonds, such as credit risk and interest rate risk.

Resources and Disclaimers:

• DWS Xtrackers Low Beta High Yield Bond ETF - https://us.xtrk.com/us/en/insights/products/etfs/xlb/
• FactSet
• Bloomberg
• Morningstar

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.