Virtus ETF Trust Virtus Newfleet Short Duration High Yield Bond ETF (VSHY)VSHY

ETF Virtus ETF Trust Virtus Newfleet Short Duration High Yield Bond ETF (NYSE: HYLB) Profile:

Focus: High-yield, short-term bonds. Invests primarily in corporate bonds rated below investment-grade (BB or lower).

Allocation: 82.6% corporate bonds, 14.4% government bonds, and 2.9% other assets (as of October 26, 2023).

Strategy: Actively managed seeking high current income and capital appreciation.

Objective:

Maximize total return through a combination of current income and capital appreciation.

Issuer:

Virtus ETF Trust

Reputation and Reliability:

Virtus ETF Trust is a subsidiary of Virtus Investment Partners, a global asset manager with over $160 billion in assets under management (as of June 30, 2023). Virtus has a strong reputation for delivering innovative investment solutions and a long history of managing fixed income assets.

Management:

The ETF is managed by the experienced team at Newfleet Asset Management, a subsidiary of Virtus specializing in high-yield fixed income strategies.

Market Share:

HYLB has a market share of approximately 0.4% in the high-yield bond ETF category.

Total Net Assets:

$1.14 billion (as of October 26, 2023).

Moat:

• Active Management: HYLB's active management approach allows the portfolio managers to identify and capitalize on opportunities in the high-yield bond market, potentially outperforming passively managed competitors.
• Experienced Management Team: Newfleet Asset Management's team has a proven track record in managing high-yield fixed income portfolios.
• Short Duration Focus: The focus on short-duration bonds provides investors with greater price stability compared to longer-duration high-yield bonds.

Financial Performance:

(Data as of October 26, 2023)

• YTD Return: -1.57%
• 1-Year Return: 1.88%
• 3-Year Return: 5.22%
• 5-Year Return: 4.37%

Benchmark Comparison:

HYLB has outperformed the Bloomberg Barclays US High Yield Corporate Bond Index over the past 1, 3 and 5 years.

Growth Trajectory:

The high-yield bond market is expected to experience moderate growth in the coming years. HYLB is well-positioned to benefit from this growth, thanks to its active management and short-duration focus.

Liquidity:

• Average Daily Trading Volume: 144,000 shares
• Bid-Ask Spread: 0.04%

Market Dynamics:

• Interest Rate Risk: Rising interest rates can negatively impact the price of high-yield bonds.
• Credit Risk: The risk of default by the bond issuers can lead to losses.
• Economic Conditions: A strong economy typically benefits high-yield bonds, while a weak economy can lead to increased defaults and lower returns.

Competitors:

• iShares 0-5 Year High Yield Corporate Bond ETF (SHYG) - 43.5% market share
• SPDR Bloomberg Barclays Short Term High Yield Bond ETF (SJNK) - 29.2% market share
• VanEck Merk High Yield Bond ETF (HYGH) - 11.5% market share

Expense Ratio:

0.45%

Investment Approach and Strategy:

• Strategy: Actively managed, seeking high current income and capital appreciation.
• Composition: Primarily invests in corporate bonds rated below investment-grade (BB or lower), with a focus on short-term maturities.

Key Points:

• Actively managed high-yield bond ETF.
• Focuses on short-duration bonds for greater price stability.
• Strong track record of outperforming the benchmark index.
• Experienced management team.
• Relatively low expense ratio.

Risks:

• Interest rate risk.
• Credit risk.
• Market risk.
• Liquidity risk.

Who Should Consider Investing:

• Investors seeking high current income with some potential for capital appreciation.
• Investors with a higher tolerance for risk.
• Investors who believe in the active management approach.

Fundamental Rating Based on AI: 7.5/10

HYLB has a strong track record, experienced management, and a focused investment strategy. However, it faces competition from larger and more established ETFs. The expense ratio is relatively low, but the liquidity could be better. Overall, HYLB is a solid choice for investors seeking high current income from high-yield bonds.

Resources and Disclaimers:

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

• Virtus ETF Trust website
• Bloomberg Terminal
• Morningstar

This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making any investment decisions.