As 2024 comes to an end, investors may be looking to adjust their bond allocations. With many still sitting in cash and rates coming down, it may be time to adapt or make a shift. High yield, for example, could appeal as dropping rates put downward pressure on cash yields. At the same time, many investors in intermediate or core bond segments may be seeing solid-yielding bonds expire. For those looking at the high yield space, then, it may be worth considering an active high yield ETF like THYF.
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The T. Rowe Price U.S. High Yield ETF (THYF ) can stand out in the high yield space thanks to its active approach. Leaning on T. Rowe Price’s fundamental research capabilities, the fund’s managers can closely scrutinize high yield opportunities. Given that firms offering high yield bonds often fall into the “junk bond” category, that active focus can parse firms’ credit quality levels.
THYF charges 56 basis points (bps) for its approach. The active high yield ETF invests in high-yield corporate bonds across a range of maturities. It looks for both total return and current income. While it mainly looks for high-yield corporates, it can also look for bank loans and preferred stock opportunities.
That approach has helped THYF produce a 6.6% 30-day SEC Standardized Yield, according T. Rowe Price data as of November 18th. The active high yield ETF has also returned 14.8% over the last year, per T. Rowe Price data.
However, active management can help any bond ETF outperform more than just in high yield. Due to bonds’ expiration dates, rolling processes, and the importance of credit quality, active managers’ attention can help funds like THYF succeed. For investors shifting out of cash or into another fixed income category, THYF may intrigue.
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