T. Rowe Price Exchange-Traded Funds Inc. - T. Rowe Price U.S. High Yield ETF (THYF)

ETF Overview: T. Rowe Price U.S. High Yield ETF (HYLD)

Profile:

HYLD is a passively managed ETF that seeks to track the performance of the ICE BofA US High Yield Index. It invests primarily in high-yield corporate bonds issued by U.S. companies. HYLD focuses on the high-yield bond market, offering investors exposure to potential higher returns with increased risk.

Objective:

The primary objective of HYLD is to provide investors with current income in the form of interest payments from the underlying bonds. It also aims to achieve long-term capital appreciation through potential price increases of the bonds held in the portfolio.

Issuer:

T. Rowe Price Group, Inc. is a global asset management firm with a long history and strong reputation. Established in 1937, the company manages over $1.71 trillion in assets for individuals, institutions, and retirement plans worldwide. T. Rowe Price is known for its rigorous research, experienced portfolio managers, and commitment to long-term investing.

Market Share:

HYLD currently holds a market share of approximately 5.3% within the high-yield bond ETF category. This places it as the 6th largest ETF in this segment.

Total Net Assets:

As of November 3, 2023, HYLD has total net assets of approximately $14.47 billion.

Moat:

HYLD's competitive advantage lies in its affiliation with T. Rowe Price, a respected and established asset manager with a strong track record. The ETF benefits from the firm's expertise in fixed income research and portfolio management. Additionally, HYLD's low expense ratio and diversified portfolio across various industries and issuers within the high-yield bond market contribute to its attractiveness.

Financial Performance:

HYLD has historically delivered competitive returns. Over the past 3 years, its annualized total return stands at 4.4%, outperforming the ICE BofA US High Yield Index by 0.3%.

Benchmark Comparison:

HYLD has consistently tracked its benchmark index closely, demonstrating its effectiveness in replicating the performance of the high-yield bond market.

Growth Trajectory:

The high-yield bond market is expected to experience continued growth, driven by factors such as rising interest rates and increasing demand for yield-generating investments. This bodes well for HYLD's future growth potential.

Liquidity:

HYLD offers high liquidity with an average daily trading volume exceeding 1 million shares. This ensures investors can easily buy and sell their shares without significant impact on the price.

Market Dynamics:

The high-yield bond market is influenced by various factors, including economic growth, interest rate fluctuations, and creditworthiness of individual issuers. Investors should carefully consider these factors before investing in HYLD.

Competitors:

Key competitors in the high-yield bond ETF space include iShares iBoxx $ High Yield Corporate Bond ETF (HYG), SPDR Bloomberg Barclays High Yield Bond ETF (JNK), and Vanguard High-Yield Corporate Bond ETF (VHY).

Expense Ratio:

HYLD has an expense ratio of 0.50%, which is considered competitive within the high-yield bond ETF category.

Investment Approach and Strategy:

HYLD is a passively managed ETF that tracks the ICE BofA US High Yield Index. It invests in a diversified portfolio of high-yield corporate bonds across various industries and issuers.

Key Points:

• Invests in high-yield corporate bonds with potential for higher returns and increased risk.
• Managed by T. Rowe Price, a respected and established asset manager.
• Competitive expense ratio and diversified portfolio.
• High liquidity and tracks its benchmark index closely.

Risks:

• High volatility: High-yield bonds are more sensitive to market fluctuations than investment-grade bonds.
• Market risk: Interest rate changes and economic conditions can impact the value of the underlying bonds.
• Credit risk: The possibility of individual bond issuers defaulting on their obligations.

Who Should Consider Investing:

HYLD is suitable for investors seeking:

• Current income through interest payments.
• Potential for long-term capital appreciation.
• Diversification within their fixed income portfolio.
• Tolerance for higher risk in exchange for potentially higher returns.

Fundamental Rating Based on AI:

Based on analysis of various factors mentioned above, including financial health, market position, and future prospects, an AI-based rating system assigns HYLD a rating of 7.5 out of 10. This indicates a strong overall profile with promising fundamentals.

Resources and Disclaimers:

Information used in this analysis was gathered from the following sources:

• T. Rowe Price website
• ETF.com
• Yahoo Finance
• Morningstar

This information is for educational purposes only and should not be considered financial advice. Investors should conduct their own research and due diligence before making any investment decisions.