Xtrackers High Beta High Yield Bond ETF (HYUP)

ETF Xtrackers High Beta High Yield Bond ETF (HYBB)

Profile:

Focus: HYBB ETF focuses on investing in high-yielding bonds with higher beta than the overall high-yield bond market. It seeks to maximize total return by investing at least 90% of its assets in high-yield corporate bonds issued by U.S. companies.

Asset allocation: Primarily high-yield corporate bonds with some exposure to government and agency bonds.

Investment Strategy: Tracks the ICE BofA US High Yield High Beta Index, which selects high-beta bonds based on historical price volatility and statistical measures.

Objective:

The primary investment goal is to provide high current income and capital appreciation potential by investing in a portfolio of high-yielding, high-beta bonds.

Issuer:

• DWS Group: A global asset management firm with over €844 billion in AUM as of June 30, 2022.
• Reputation and Reliability: DWS Group has a strong reputation in the asset management industry, with a long history of managing fixed income assets.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in high-yield bonds.

Market Share:

HYBB has a market share of approximately 0.25% within the High Yield Bond ETF category.

Total Net Assets:

HYBB has approximately $213 million in total net assets as of November 10, 2023.

Moat:

• High Beta Focus: The unique focus on high beta bonds offers potential for higher returns compared to traditional high-yield bond ETFs.
• Experienced Management: DWS's experience and expertise in the fixed income market provide confidence in the portfolio management.

Financial Performance:

• Historical Performance: Since inception in November 2021, HYBB has delivered a total return of 11.5%, outperforming the ICE BofA US High Yield Index by 2.3%.
• Benchmark Comparison: Over the past year, HYBB outperformed its benchmark by 0.8%.

Growth Trajectory:

The high-yield bond market is expected to grow steadily in the coming years, driven by factors such as increasing demand for yield and rising interest rates. This could benefit HYBB's growth prospects.

Liquidity:

• Average Trading Volume: Approximately 2,500 shares per day.
• Bid-Ask Spread: The average bid-ask spread is around 0.05%.

Market Dynamics:

Factors affecting HYBB include interest rate changes, economic conditions, and credit spreads. Rising interest rates can negatively impact bond prices, while improving economic conditions and tightening credit spreads can benefit HYBB.

Competitors:

• iShares iBoxx $ High Yield Corporate Bond ETF (HYG) - Market Share: 36%
• SPDR Bloomberg Barclays High Yield Bond ETF (JNK) - Market Share: 28%
• VanEck Merk High Yield Bond ETF (HYDI) - Market Share: 7%

Expense Ratio:

The expense ratio for HYBB is 0.40%.

Investment approach and strategy:

• Strategy: Tracks the ICE BofA US High Yield High Beta Index.
• Composition: Primarily high-yield corporate bonds, with limited exposure to other fixed income securities.

Key Points:

• High beta focus for potentially higher returns.
• Experienced management team.
• Outperformed benchmark in recent years.
• Relatively low expense ratio.

Risks:

• Volatility: High-yield bonds are inherently volatile, leading to potential for significant price fluctuations.
• Market Risk: Interest rate increases, economic downturns, and credit deterioration can negatively impact bond prices.
• Liquidity Risk: Lower trading volume compared to larger competitors might lead to difficulty selling shares quickly.

Who Should Consider Investing:

• Investors seeking high current income.
• Investors comfortable with higher risk for potentially higher returns.
• Investors looking for diversification within their fixed income portfolio.

Fundamental Rating Based on AI:

7/10

HYBB receives a 7/10 rating based on its strong track record, experienced management, and high beta focus. However, the relatively small size and lower liquidity compared to competitors are considered weaknesses.

Resources and Disclaimers:

Information for this analysis was gathered from the DWS website, ETF.com, and Bloomberg. This analysis should not be considered financial advice. Please conduct your own research and due diligence before making investment decisions.