Guggenheim Files for Short-Term High Yield Bond ETF

by: Eric Dutram

As the ETF lineup continues to expand at a breakneck pace, the pipeline continues to fill with innovative ideas that could make 2011 yet another active year on the product development front. So far in 2010 more than 200 new ETFs have debuted, and there are currently hundreds of funds in registration. One of the latest SEC filings came from Illinois-based Guggenheim (formerly Claymore), which has plans for an actively-managed short-term high-yield bond fund. According to the filing, the Guggenheim Enhanced Short Duration High Yield Bond ETF would seek “to maximize total return, through monthly income and capital appreciation, consistent with capital preservation.” The proposed fund would focus on junk bonds that are close to maturity, generally with an effective duration of one year or less.

Guggenheim doesn’t currently offer any actively-managed products, but has laid the groundwork to convert some of its passively-indexed funds to an active strategy. A number of actively-managed ETFs have hit the market so far in 2010, with mixed results. Interest in active funds has generally been slow to materialize, although a handful of active PIMCO ETFs have drawn huge inflows in a relatively short period of time. Earlier this month, AdvisorShares partnered with Peritus to launch an actively-managed junk bond ETF. In addition to HYLD, there are three ETFs focused on high yield corporate bonds (PHB, JNK, HYG) and another offering exposure to high yield municipal bonds (NYSEARCA:HYD).

With interest rates near record lows and expected to remain depressed for the foreseeable future, investors with a focus on current return have become increasingly aggressive in their hunt for yield. Junk bond ETFs have seen big inflows in 2010, as have dividend-weighted equity ETFs and funds offering exposure to the MLP sector.

Disclosure: No positions at time of writing.

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