Making its debut on 07/17/2018, smart beta exchange traded fund FlexShares High Yield ValueScored Bond ETF (
HYGV Quick Quote HYGV - Free Report) provides investors broad exposure to the High-Yield/Junk Bond ETFs category of the market. What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $711.14 million, this makes it one of the average sized ETFs in the High-Yield/Junk Bond ETFs. HYGV is managed by Flexshares. Before fees and expenses, this particular fund seeks to match the performance of the NORTHERN TRUST HY VLU-SCRD US CORP BD ID.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for HYGV are 0.37%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 6.35%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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 lost about -4.77% and is up roughly 0.32% so far this year and in the past one year (as of 02/23/2022), respectively. HYGV has traded between $46.48 and $50.17 during this last 52-week period.
The fund has a beta of 0.46 and standard deviation of 11.14% for the trailing three-year period. With about 879 holdings, it effectively diversifies company-specific risk.
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 Quick Quote JNK - Free Report) tracks Bloomberg Barclays High Yield Very Liquid Index and the iShares iBoxx High Yield Corporate Bond ETF ( HYG Quick Quote HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index. SPDR Bloomberg High Yield Bond ETF has $7.70 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $16.52 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.
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.