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Is FlexShares High Yield ValueScored Bond ETF (HYGV) a Strong ETF Right Now?
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Launched on 07/17/2018, the FlexShares High Yield ValueScored Bond ETF (HYGV - Free Report) is a smart beta exchange traded fund offering broad exposure to the High-Yield/Junk Bond ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Flexshares, and has been able to amass over $608.75 million, which makes it one of the average sized ETFs in the High-Yield/Junk Bond ETFs. This particular fund seeks to match the performance of the NORTHERN TRUST HY VLU-SCRD US CORP BD ID before fees and expenses.
The Northern Trust High Yield Value-Scored US Corporate Bond Index measures the performance of a diversified universe of high yield, US-dollar denominated bonds of companies exhibiting favorable fundamental qualities, market valuations and liquidity.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.37% for this ETF, which makes it on par with most peer products in the space.
HYGV's 12-month trailing dividend yield is 5.60%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Altice France Sa (france)-5.12%-7-15-2029 accounts for about 0.69% of the fund's total assets, followed by Csc Holdings Llc-5.75%-1-15-2030 (BKFH0Y9) and Staples Inc-7.50%-4-15-2026.
HYGV's top 10 holdings account for about 5.65% of its total assets under management.
Performance and Risk
The ETF has added about 4.20% so far this year and was up about 4.74% in the last one year (as of 12/20/2021). In the past 52-week period, it has traded between $48.50 and $50.17.
The fund has a beta of 0.46 and standard deviation of 11.19% for the trailing three-year period. With about 879 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares High Yield ValueScored Bond ETF is not a suitable option for investors seeking to outperform the High-Yield/Junk Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
SPDR Bloomberg High Yield Bond ETF (JNK - Free Report) tracks Bloomberg Barclays High Yield Very Liquid Index and the iShares iBoxx High Yield Corporate Bond ETF (HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index. SPDR Bloomberg High Yield Bond ETF has $8.86 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $19.98 billion. JNK has an expense ratio of 0.40% and HYG charges 0.48%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the High-Yield/Junk Bond ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is FlexShares High Yield ValueScored Bond ETF (HYGV) a Strong ETF Right Now?
Launched on 07/17/2018, the FlexShares High Yield ValueScored Bond ETF (HYGV - Free Report) is a smart beta exchange traded fund offering broad exposure to the High-Yield/Junk Bond ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Flexshares, and has been able to amass over $608.75 million, which makes it one of the average sized ETFs in the High-Yield/Junk Bond ETFs. This particular fund seeks to match the performance of the NORTHERN TRUST HY VLU-SCRD US CORP BD ID before fees and expenses.
The Northern Trust High Yield Value-Scored US Corporate Bond Index measures the performance of a diversified universe of high yield, US-dollar denominated bonds of companies exhibiting favorable fundamental qualities, market valuations and liquidity.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.37% for this ETF, which makes it on par with most peer products in the space.
HYGV's 12-month trailing dividend yield is 5.60%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Altice France Sa (france)-5.12%-7-15-2029 accounts for about 0.69% of the fund's total assets, followed by Csc Holdings Llc-5.75%-1-15-2030 (BKFH0Y9) and Staples Inc-7.50%-4-15-2026.
HYGV's top 10 holdings account for about 5.65% of its total assets under management.
Performance and Risk
The ETF has added about 4.20% so far this year and was up about 4.74% in the last one year (as of 12/20/2021). In the past 52-week period, it has traded between $48.50 and $50.17.
The fund has a beta of 0.46 and standard deviation of 11.19% for the trailing three-year period. With about 879 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares High Yield ValueScored Bond ETF is not a suitable option for investors seeking to outperform the High-Yield/Junk Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
SPDR Bloomberg High Yield Bond ETF (JNK - Free Report) tracks Bloomberg Barclays High Yield Very Liquid Index and the iShares iBoxx High Yield Corporate Bond ETF (HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index. SPDR Bloomberg High Yield Bond ETF has $8.86 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $19.98 billion. JNK has an expense ratio of 0.40% and HYG charges 0.48%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the High-Yield/Junk Bond ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.