American Century Investments has partnered with Nomura Asset Management to launch a new active ETF, the American Century Select High Yield (AHYB), which follows an investment strategy that aligns with an American Century mutual fund focused on high income, according to the press release.
The fund focuses on high-yield corporate bonds that are rated BB and B, offering the opportunity for high current income alongside exposure to risk-adjusted returns, and while it doesn’t have any maturity requirements, it generally invests in debt securities with three to 10 years of maturity.
The fund will have three portfolio managers from Nomura Corporate Research and Asset Management (NCRAM) as well as a portfolio manager from American Century, and will be overseen by the CEO and CIO of NCRAM, David Crall.
“We are thrilled to provide another fixed income solution to help meet client demand,” said Crall in the press release. “This product will give us an opportunity to invest in relatively higher credit quality high yield bonds where the team believes there tend to be fewer defaults, lower volatility, and improved liquidity.”
The fund typically employs a long-only strategy that approaches investing from the bottom up and seeks to invest in companies that the portfolio managers believe will be able to navigate various market environments and economic cycles with their debt load. The portfolio managers look for companies that create strong and sustained cash flow, as this would allow them to potentially reduce their leverage and increase their ratings. A top-down strategy is also employed to identify pockets of the market that present opportunities for high yield and are currently undervalued.
When buying and selling debt securities, the portfolio managers take into account the overall credit standard of the fund, current and future interest rates, economic conditions that include inflationary risks, the issuer and their finance history and practices, and anything that makes a particular bond more or less attractive than other options.
“In the current environment where investors are looking for robust yield, we are excited to now offer our high yield product as an ETF with our strategic partners at Nomura,” said Ed Rosenberg, head of ETFs for American Century. “We feel this is a way we can continue striving to meet client demand for high income in this low yield environment.”
AHYB carries an expense ratio of 0.45% and discloses holdings daily.
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