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Is FlexShares High Yield Value-Scored Bond ETF (HYGV) a Strong ETF Right Now?
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Designed to provide broad exposure to the High-Yield/Junk Bond ETFs category of the market, the FlexShares High Yield Value-Scored Bond ETF (HYGV - Free Report) is a smart beta exchange traded fund launched on 07/17/2018.
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.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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
The fund is managed by Flexshares, and has been able to amass over $1.05 billion, which makes it one of the larger ETFs in the High-Yield/Junk Bond ETFs. Before fees and expenses, HYGV 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.37%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 7.90%.
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.
Looking at individual holdings, Cash accounts for about 0.89% of total assets, followed by Ngl Energy Operating Llc / Ngl Energy Finance Corp (NGL - Free Report) and Athenahealth Group Inc Callable Notes Fixed 6.5% (ATHENA).
HYGV's top 10 holdings account for about 6.46% of its total assets under management.
Performance and Risk
So far this year, HYGV return is roughly 2.87%, and is down about -5.07% in the last one year (as of 03/08/2023). During this past 52-week period, the fund has traded between $38.86 and $46.58.
The ETF has a beta of 0.49 and standard deviation of 13.07% for the trailing three-year period. With about 936 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares High Yield Value-Scored Bond ETF is a reasonable option for investors seeking to outperform the High-Yield/Junk Bond ETFs segment of the market. However, there are other ETFs in the space which investors could 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 $8.69 billion in assets, iShares iBoxx $ High Yield Corporate Bond ETF has $12.06 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 Value-Scored Bond ETF (HYGV) a Strong ETF Right Now?
Designed to provide broad exposure to the High-Yield/Junk Bond ETFs category of the market, the FlexShares High Yield Value-Scored Bond ETF (HYGV - Free Report) is a smart beta exchange traded fund launched on 07/17/2018.
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.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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
The fund is managed by Flexshares, and has been able to amass over $1.05 billion, which makes it one of the larger ETFs in the High-Yield/Junk Bond ETFs. Before fees and expenses, HYGV 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.37%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 7.90%.
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.
Looking at individual holdings, Cash accounts for about 0.89% of total assets, followed by Ngl Energy Operating Llc / Ngl Energy Finance Corp (NGL - Free Report) and Athenahealth Group Inc Callable Notes Fixed 6.5% (ATHENA).
HYGV's top 10 holdings account for about 6.46% of its total assets under management.
Performance and Risk
So far this year, HYGV return is roughly 2.87%, and is down about -5.07% in the last one year (as of 03/08/2023). During this past 52-week period, the fund has traded between $38.86 and $46.58.
The ETF has a beta of 0.49 and standard deviation of 13.07% for the trailing three-year period. With about 936 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares High Yield Value-Scored Bond ETF is a reasonable option for investors seeking to outperform the High-Yield/Junk Bond ETFs segment of the market. However, there are other ETFs in the space which investors could 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 $8.69 billion in assets, iShares iBoxx $ High Yield Corporate Bond ETF has $12.06 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.