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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?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
Managed by Flexshares, HYGV has amassed assets over $883.02 million, making it one of the larger ETFs in the High-Yield/Junk Bond ETFs. HYGV 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
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.
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 6.57%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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
Year-to-date, the FlexShares High Yield ValueScored Bond ETF has lost about -7.49% so far, and is down about -3.60% over the last 12 months (as of 04/27/2022). HYGV has traded between $44.68 and $50.17 in this past 52-week period.
The fund has a beta of 0.45 and standard deviation of 11.43% 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.
IShares Broad USD High Yield Corporate Bond ETF (USHY - Free Report) tracks BofA Merrill Lynch U.S. High Yield Constrained Index and the iShares iBoxx High Yield Corporate Bond ETF (HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index. IShares Broad USD High Yield Corporate Bond ETF has $6.71 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $12.55 billion. USHY has an expense ratio of 0.15% 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?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
Managed by Flexshares, HYGV has amassed assets over $883.02 million, making it one of the larger ETFs in the High-Yield/Junk Bond ETFs. HYGV 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
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.
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 6.57%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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
Year-to-date, the FlexShares High Yield ValueScored Bond ETF has lost about -7.49% so far, and is down about -3.60% over the last 12 months (as of 04/27/2022). HYGV has traded between $44.68 and $50.17 in this past 52-week period.
The fund has a beta of 0.45 and standard deviation of 11.43% 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.
IShares Broad USD High Yield Corporate Bond ETF (USHY - Free Report) tracks BofA Merrill Lynch U.S. High Yield Constrained Index and the iShares iBoxx High Yield Corporate Bond ETF (HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index. IShares Broad USD High Yield Corporate Bond ETF has $6.71 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $12.55 billion. USHY has an expense ratio of 0.15% 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.