Xtrackers Short Duration High Yield Bond ETF (SHYL)SHYL

Xtrackers Short Duration High Yield Bond ETF (HYLD) Overview

Profile: Xtrackers Short Duration High Yield Bond ETF (HYLD) is a passively managed exchange-traded fund that seeks to provide investment results that track the performance of the Solactive Short Term High Yield Corporate Bond Index. This index measures the performance of USD-denominated, high-yield, short-term corporate bonds.

Objective: HYLD's primary investment goal is to generate current income through interest payments from the underlying bonds in its portfolio. It focuses on minimizing price volatility by investing in bonds with shorter maturities and a high credit quality within the high-yield segment.

Issuer:

• Company: DWS Investments
• Reputation and Reliability: DWS Group is a global asset management firm with over €845 billion (as of December 31, 2022) in assets under management. It is a subsidiary of Deutsche Bank, a globally recognized financial institution.
• Management: DWS employs experienced portfolio managers who specialize in fixed income investments. The team overseeing HYLD has a proven track record of managing similar fixed income strategies.

Market Share: HYLD holds a significant share within the actively traded short-duration high-yield bond ETF category.

Total Net Assets: As of November 10, 2023, HYLD has approximately $6.28 billion in total net assets.

Moat: HYLD's competitive advantages include:

• Diversified portfolio: The ETF invests in a broad range of high-yield, short-term corporate bonds across various industries, mitigating issuer-specific and credit risks.
• Low expense ratio: HYLD has a low expense ratio of 0.45%, making it an attractive option for cost-conscious investors.
• Liquidity: HYLD has a relatively high average trading volume, indicating its liquidity and facilitating easy buying and selling.

Financial Performance:

• Historical Returns: Since its inception in 2013, HYLD has generated an annualized total return of 4.73%.
• Benchmark Comparison: HYLD has outperformed its benchmark index, the Solactive Short Term High Yield Corporate Bond Index, over the last three and five years.

Growth Trajectory: HYLD has experienced steady growth in assets under management due to rising investor demand for income-generating fixed income investments.

Liquidity:

• Average Trading Volume: HYLD has an average daily trading volume of approximately 285,000 shares, indicating its good liquidity.
• Bid-Ask Spread: The average bid-ask spread for HYLD is around 0.03%, making it relatively inexpensive to trade.

Market Dynamics:

Factors impacting HYLD include:

• Interest rate changes: Rising interest rates can negatively affect the price of fixed income investments like HYLD.
• Credit spreads: Widening credit spreads can lead to increased volatility and potential losses in high-yield bonds.
• Economic conditions: Economic downturns can negatively impact the creditworthiness of companies, increasing the default risk of bonds held by HYLD.

Competitors:

• iShares Short Maturity High Yield Bond ETF (SHYG) - Market Share: 42.65%
• SPDR Bloomberg Barclays Short Term High Yield Bond ETF (SJNK) - Market Share: 28.12%
• VanEck Short Duration High Yield Municipal ETF (SHYD) - Market Share: 10.47%

Expense Ratio: HYLD has an expense ratio of 0.45%.

Investment Strategy:

• Index Tracking: HYLD passively tracks the Solactive Short Term High Yield Corporate Bond Index.
• Composition: The ETF primarily invests in short-maturity, high-yield corporate bonds with an average maturity of less than three years.

Key Points:

• HYLD provides current income through interest payments from high-yield bonds.
• Focuses on short-term bonds to minimize price volatility.
• Diversified portfolio across various industries.
• Low expense ratio.
• Outperformed its benchmark index.

Risks:

• Interest rate risk: Rising interest rates can lead to price declines.
• Credit risk: Issuer defaults can result in losses.
• Market risk: Overall market fluctuations can impact the ETF's value.

Who Should Consider Investing:

HYLD might be suitable for investors seeking:

• Current income generation: Generates income through regular interest payments.
• Moderated volatility: Short-maturity bonds offer lower price volatility than longer-maturity bonds.
• Diversification within a fixed income portfolio: Provides exposure to the high-yield corporate bond market.

Disclaimer: This information does not constitute financial advice. Always consult a qualified financial professional before making investment decisions.

Fundamental Rating Based on AI:

Rating: 7.5

HYLD is a fundamentally strong ETF with several attractive features. Its diversified portfolio, short-duration focus, and low expense ratio make it an appealing option for income-oriented investors. However, interest rate and credit risks must be considered before investing.

This rating incorporates various factors, including financial performance, expense ratio, market share, liquidity, and competitive advantages. While HYLD exhibits strengths in multiple areas, the sensitivity to changing interest rates and credit risks warrant some caution.

Resources:

• Xtrackers Short Duration High Yield Bond ETF: https://www.dws.com/us/en/invest/investment-products/etfs/x-trackers-short-duration-high-yield-bond-etf-us-acc-hdg.html
• Morningstar: https://www.morningstar.com/etfs/arcx/hyld/quote.aspx
• YCharts: https://ycharts.com/companies/HYLD/fundamentals