Under the Hood of the Eaton Vance High Yield ETF

Some advisors may be tempted to forgo high yield exposure due to its riskier profile compared to other fixed income investments. However, by leaving a portfolio underweight high yield exposure, advisors may be unintentionally increasing overall risk.

Instead, a high yield ETF that skews exposure toward higher-quality junk bonds may be an ideal solution. According to Todd Rosenbluth, head of research at VettaFi, many advisors want high yield exposure but are concerned about taking on too much risk.

The Eaton Vance High Yield ETF (EVHY C+) provides actively managed exposure to a high yield portfolio. The fund focuses exposure to the higher-quality portion of the high yield universe (primarily BB-rated and B-rated issuers).

“This actively managed ETF focuses on higher-quality speculative grade issuers through proprietary credit research,” Rosenbluth said. “Active management can better identify candidates for a ratings upgrade.”

EVHY was launched in October 2023 with an expense ratio of 48 basis points. The fund has accreted $21 million in assets under management.

EVHY is part of Morgan Stanley Investment Management’s suite of ETFs. Morgan Stanley Investment Management is a heavyweight with a strong history in providing well-regarded actively managed strategies.

The fund was included in the firm’s debut of five active ETFs on NYSE Arca last October. The suite includes one Parametric alternative income ETF, one Parametric hedged equity ETF, and three Eaton Vance fixed income ETFs.

See more: Hedge Your Large-Cap Bets With PHEQ

Last February, MSIM launched six Calvert ETFs on NYSE Arca. The Calvert ETFs offer exposure to four indexed and two active ESG strategies across a range of asset classes.

For more news, information, and analysis, visit The ETF Yield Channel.