AdvisorShares Peritus High Yield ETF (NYSEARCA:HYLD) began trading 12/01/2010, becoming the first actively managed ETF offering exposure to high yield corporate bonds (also known as junk bonds). Its objective is to generate high current income with a secondary goal of capital appreciation.
Timothy Gramatovich and Ronald Heller of Peritus Asset Management, the fund’s subadvisor, will manage HYLD’s portfolio. As with other ETFs sponsored by AdvisorShares, the net expense ratio is capped but still steep at 1.35%, of which 1.10% is the management fee.
The largest of the 25 current holdings include Chiquita Brands Intl 8.875 12/01/2015 at 4.1% of the portfolio, Poindexter JB Inc 8.75 3/15/2014 at 4.0%, Sanmina-SCI Corp 8.125 3/1/2016 at 4.0%, Affinion Group 7.875 12/15/2018 at 3.7%, and Select Medical Holdings Flt 9/15/2015 at 3.7%. The fund currently has 22.2% in cash.
Unfortunately, many aspects of this ETF are unknown, making the evaluation process quite difficult at this time. Missing information includes current yield, maturity, average credit rating, anticipated turnover, and the extent of active management.
The prospectus sheds some light on the performance track record for Peritus. For the 10-year period ending 12/31/2009, the firm’s composite annual performance was +10.4% versus +8.2% for the benchmark, Barclays Capital High Yield Index. No volatility data is provided, but a review of the performance graph indicates much higher volatility than the benchmark and a drawdown of more than 45%.
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Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.