We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is FlexShares High Yield Value-Scored Bond ETF (HYGV) a Strong ETF Right Now?
Read MoreHide Full Article
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?
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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Flexshares. HYGV has been able to amass assets over $1.38 billion, making 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.
Operating expenses on an annual basis are 0.37% for HYGV, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 8.90%.
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.
Looking at individual holdings, Staples Inc Callable Notes Fixed 7.5% 15/apr/2026 (SPLS) accounts for about 0.80% of total assets, followed by Transdigm Inc Callable Notes Fixed 5.5% (TDG - Free Report) and Tenneco Inc Callable Notes Fixed 8% 17/nov/2028 (TEN).
HYGV's top 10 holdings account for about 6.38% of its total assets under management.
Performance and Risk
The ETF has gained about 1.39% and it's up approximately 10.05% so far this year and in the past one year (as of 05/30/2024), respectively. HYGV has traded between $38.51 and $41.20 during this last 52-week period.
The ETF has a beta of 0.49 and standard deviation of 8.78% for the trailing three-year period. With about 905 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares High Yield Value-Scored 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 $12.25 billion in assets, iShares iBoxx $ High Yield Corporate Bond ETF has $16.95 billion. USHY has an expense ratio of 0.08% and HYG charges 0.49%.
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
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?
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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Flexshares. HYGV has been able to amass assets over $1.38 billion, making 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.
Operating expenses on an annual basis are 0.37% for HYGV, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 8.90%.
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.
Looking at individual holdings, Staples Inc Callable Notes Fixed 7.5% 15/apr/2026 (SPLS) accounts for about 0.80% of total assets, followed by Transdigm Inc Callable Notes Fixed 5.5% (TDG - Free Report) and Tenneco Inc Callable Notes Fixed 8% 17/nov/2028 (TEN).
HYGV's top 10 holdings account for about 6.38% of its total assets under management.
Performance and Risk
The ETF has gained about 1.39% and it's up approximately 10.05% so far this year and in the past one year (as of 05/30/2024), respectively. HYGV has traded between $38.51 and $41.20 during this last 52-week period.
The ETF has a beta of 0.49 and standard deviation of 8.78% for the trailing three-year period. With about 905 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares High Yield Value-Scored 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 $12.25 billion in assets, iShares iBoxx $ High Yield Corporate Bond ETF has $16.95 billion. USHY has an expense ratio of 0.08% and HYG charges 0.49%.
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.