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AdvisorShares, a US-based sponsor of actively managed exchange-traded funds (ETFs), has announced that the AdvisorShares Peritus High Yield ETF (HYLD) has achieved a 5-Star Morningstar Rating for both its 3-year and overall risk-adjusted performances.
The fund is managed by California-based Peritus Asset Management, a value-based active credit manager that specializes in fixed income opportunities in the corporate bond and loan market with a focus on the non-investment grade asset class.
Morningstar compares each ETF’s risk-adjusted return, with at least a 3-year history, to the open-end mutual fund rating breakpoints for the high yield bond category. Consistent with the open-end mutual fund ratings, HYLD earned its 5-star ranking as being in the top 10% of funds – that includes both ETFs and mutual funds – in the high yield bond category.
Listed in November 2010, the fund seeks to generate a high, tangible current income provided primarily by non-investment grade corporate debt securities with a secondary goal of capital appreciation.
With valuation and fundamental analysis an essential component of their strategy, Peritus’ portfolio management team takes an active credit approach and concentrates only on the securities they feel offer the best value with the least risk within the company’s entire capital structure. Since the fund largely focuses on seasoned credits and is able to include floating rate loans as a component in the portfolio, its stated duration and maturity tends to be shorter than that of the market indcies, while its actual duration is generally even shorter due to early re-financings and take-outs via calls, poison puts, and tenders.
As an actively managed ETF, the portfolio management team has the flexibility to identify securities perceived as offering the best opportunities within the high yield space and exploit benchmark inefficiencies and deliver alpha for shareholders.
“We are pleased to offer an actively managed ETF with a 5-Star Morningstar Rating within a growing and robust marketplace,” said Noah Hamman, chief executive officer of AdvisorShares. “This recognition is a testament to Peritus’ outstanding portfolio management and as well as that active management in ETFs not only works, but has worked exceptionally well.”
“We appreciate Morningstar’s 5-star recognition of HYLD and believe this acknowledgment reinforces that active management is essential in the high yield market,” said Tim Gramatovich, chief investment officer of Peritus. “Our extensive expertise in navigating the credit markets for attractive high yield opportunities, along with the ability to be selective in our investment process and not subject to issuance size restrictions faced by index-based products, we feel not only puts us at an advantage, but most importantly benefits our shareholders.”
The fund is listed on the NYSE Arca and has a net expense ratio of 1.25%.