Don’t Be Passive: Why You Need Active Management in High Yield

DDespite a difficult market environment for core bond allocations, high yield could be a good option for investors. However, the need to balance risk against maximizing return is vital.

In the next webcast, Don’t Be Passive: Why You Need Active Management in High Yield, Seema Shah, Chief Strategist, Leading Global Investors; Mark Cernicky, Portfolio Specialist, Principal Global Fixed Income; and Matthew Cohen, Head of ETF Sales Team, Leading Global Investors, will highlight the benefits of an active approach to navigating the fixed income market, including market insight, and strategy which consists of a concentrated portfolio of income producing ideas.

More specifically, the Primary Active High Yield ETF (NYSEArca: YLD) is an actively managed fund that seeks to achieve its investment objective by investing in lower quality (commonly referred to as “junk” or “high yield”) fixed income securities, such as bonds and bank loans. YLD also invests in US Treasury bills, bonds and other obligations issued or guaranteed by the US government or its agencies or instruments, high quality bank loans (also referred to as senior floating rate interest) and securities privileged.

“Our stock selection process results in a concentrated portfolio of our most compelling, revenue-generating ideas,” according to Principal. “We seek to maximize revenue potential while managing risk.”

Active managers follow a fundamental, technical and valuation framework that establishes a consistent research approach designed to identify the best risk/reward opportunities. The strategy also follows well-defined exit strategies to minimize capital losses.

Historically, high-yield bonds have provided comparable returns with lower volatility, according to Principal. High yield bonds have a low to moderate correlation with other fixed income asset classes, which can benefit investors in rising rate environments. Additionally, the structure of the ETF can help provide liquidity and improve the tax efficiency of the portfolio.

Financial advisors interested in learning more about the high yield strategy can register for the Wednesday, March 23 webcast here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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