More New Junk Bond ETFs Debut

After launching the Xtrackers Short Duration High Yield Bond ETF SHYL, Deutsche Asset Management added two more high-yield corporate bond exchange traded funds to its lineup Thursday.

The newest additions to Deutsche Asset Management's stable of high-yield bond ETFs are the Xtrackers High Beta High Yield Bond ETF HYUP and the Xtrackers Low Beta High Yield Bond ETF HYDW.

The Xtrackers High Beta High Yield Bond ETF tracks the Solactive USD High Yield Corporates Total Market High Beta Index. The new ETF is designed to provide investors with exposure to higher beta, junk-rated corporate debt.

More Details On HYUP

HYUP holds 195 bonds. Bonds in the ETF are from issuers with at least $1 billion in outstanding face value, while individual issues must have at least $400 million in outstanding face value.

The fund uses a representative sampling indexing strategy in seeking to track the underlying index, meaning it generally will invest in a sample of securities in the index whose risk, return and other characteristics resemble the risk, return and other characteristics of the underlying index as a whole,” according to a prospectus. “The fund will invest at least 80 percent of its total assets, (but typically far more) in component securities of the underlying index.”

HYUP charges 0.35 percent per year, or $35 on a $10,000 investment.

Examining HYDW

HYDW, the lower beta offering, tracks the Solactive USD High Yield Corporates Total Market Low Beta Index. The index is designed to deliver exposure to junk bonds with lower betas, which can be accompanied by lower yields.

HYDW holds 174 bonds and charges 0.25 percent annually, or $25 on a $10,000 investment.

“In today’s low interest rate environment, fixed-income investors are looking for new sources of yield,” Fiona Bassett, head of passive asset management in the Americas, said in a statement. “Our expanded Xtrackers suite of high yield bond ETFs uses rules-based strategies to provide exposure to different levels of credit and interest rate risk, allowing investors to manage credit and duration exposure for a more customized solution.” 

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