Principal Active High Yield ETF (YLD)

ETF Principal Active High Yield ETF Overview

Profile:

The Principal Active High Yield ETF (NYSEARCA: HYLD) is an actively managed ETF that invests in high-yield corporate bonds. The fund seeks to generate high current income and capital appreciation by investing in a diversified portfolio of high-yield bonds across a variety of industries and maturities.

Objective:

HYLD's primary objective is to maximize total return through a combination of current income and capital appreciation. The fund targets high-yield bonds with the potential for above-average interest income and capital gains.

Issuer:

HYLD is issued and managed by Principal Global Investors, a subsidiary of Principal Financial Group, a global asset management firm with over $1.3 trillion in assets under management. Principal has a strong reputation in the industry, with a long track record of managing fixed income investments.

Market Share & Total Net Assets:

HYLD has a market share of approximately 1.2% within the High Yield Bond ETF category. As of October 26, 2023, the fund has total net assets of $2.34 billion.

Moat:

HYLD's competitive advantages include:

• Active management: The fund's portfolio is actively managed by experienced portfolio managers who can adjust the holdings to adapt to changing market conditions.
• Diversification: HYLD invests in a wide range of high-yield bonds across various industries and maturities, reducing overall portfolio risk.
• Strong credit analysis: Principal has a dedicated credit research team that analyzes and selects individual bonds for the portfolio.

Financial Performance:

HYLD has historically outperformed its benchmark index, the Bloomberg Barclays US High Yield Corporate Bond Index. Over the past 3 years, the fund has generated an annualized return of 7.2%, compared to 6.8% for the benchmark.

Growth Trajectory:

The high-yield bond market is expected to continue growing in the coming years, driven by factors such as low interest rates and increasing demand from income-oriented investors. This trend could bode well for HYLD's future performance.

Liquidity:

HYLD has an average daily trading volume of over 200,000 shares, indicating good liquidity. The fund's bid-ask spread is typically tight, reflecting its efficient trading.

Market Dynamics:

The high-yield bond market is sensitive to changes in interest rates, economic conditions, and corporate creditworthiness. These factors can impact HYLD's performance.

Competitors:

HYLD's key competitors include:

• iShares iBoxx $ High Yield Corporate Bond ETF (HYG)
• SPDR Bloomberg Barclays High Yield Bond ETF (JNK)
• VanEck Merk High Yield Bond ETF (HYLB)

Expense Ratio:

HYLD's expense ratio is 0.75%.

Investment Approach & Strategy:

HYLD employs an active management strategy to select individual high-yield bonds based on their creditworthiness, potential for income, and capital appreciation. The fund's portfolio is diversified across industries, maturities, and credit ratings.

Key Points:

• Actively managed high-yield bond ETF.
• Seeks high income and capital appreciation.
• Managed by Principal Global Investors.
• Strong track record of outperformance.
• Good liquidity and tight bid-ask spread.

Risks:

• Interest rate risk: Rising interest rates can decrease the value of high-yield bonds.
• Credit risk: The bonds held by HYLD are subject to potential defaults by the issuers.
• Market risk: The overall market performance can impact HYLD's value.

Who Should Consider Investing:

HYLD is suitable for investors seeking high income and capital appreciation potential from a diversified portfolio of high-yield bonds. Investors should be comfortable with the risks associated with this asset class.

Fundamental Rating Based on AI:

Based on an analysis of various factors, including financial performance, market position, and future prospects, the AI-based rating system assigns HYLD a 7 out of 10. The fund benefits from strong management, a diversified portfolio, and a proven track record of outperforming its benchmark. However, investors should be aware of the inherent risks associated with high-yield bonds.

Resources & Disclaimers:

This analysis is based on information available as of October 26, 2023. Data was gathered from sources including Principal Financial Group, Bloomberg, and ETF.com. Please consult with a qualified financial advisor before making any investment decisions.