Xtrackers by DWS has launched an ETF designed to provide dynamic risk-controlled exposure to US dollar high-yield corporate bonds.
Xtrackers Risk Managed USD High Yield Strategy ETF (NYSE: HYRM) tracks the Adaptive Wealth Strategies Risk Managed High Yield Index, which uses a daily algorithm to dynamically adjust exposure between bonds and cash equivalent investments.
It is designed to track the performance of the US dollar-denominated high yield corporate bond market during normal market conditions, and the performance of a US dollar cash position (accruing interest at the Effective Federal Funds Rate) during periods of adverse market conditions.
The Underlying Index uses a rules-based allocation mechanism to allocate between either 100 per cent exposure to the Solactive USD High Yield Corporates Total Market Index or 100 per cent exposure to the Solactive Fed Funds Effective Rate Total Return Index, based on quantitative market risk signals derived from measurements of price changes in the market.
“HYRM may be an interesting way for investors to gain exposure to the USD high yield bond market with a built-in risk-management process,” says Michael Curtis, Head of US Passive Product. “Downside, or drawdown risks, are a key factor when allocating to high yield bonds, which the allocation mechanism of HYRM’s underlying index seeks to address effectively.”
The launch of this product is yet another example of Xtrackers’ continued partnership and collaboration with its key relationships with US and global investors to bring innovative products to market that serve as useful investment solutions.
“We are excited to see the continued development of Adaptive Wealth Strategies Indexes into the fixed income markets,” said Patrick Bobbins of NorthCrest Asset Management. “We appreciate the opportunity to partner with DWS Xtrackers on this risk-managed high yield strategy and bringing our third index to market.”
The ETF has a gross/net expense ratio of 0.45 per cent/0.30 per cent and is designed to utilise investments in other Xtrackers ETFs in order to gain exposure to USD high yield bonds, in particular Xtrackers USD High Yield Corporate Bond ETF (NYSE: HYLB).