Global asset manager AllianceBernstein has introduced an actively managed fixed income ETF targeting opportunities within high yield corporate bonds.

Noel Archard, Global Head of ETFs and Portfolio Solutions at AllianceBernstein.

The AB High Yield ETF (HYFI US) has been listed on NYSE Arca with an expense ratio of 0.40%.

The fund has been created by converting an existing mutual fund with $70 million in assets under management that delivered the same strategy.

The fund invests primarily in US dollar-denominated high yield corporate bonds from issuers worldwide, including those located in emerging markets. Securities with any duration are eligible for selection.

Security selection is driven by a disciplined investment process that combines quantitative and fundamental research as well as both top-down and bottom-up analysis. The ETF also emphasizes dynamic beta management with the aim to aggressively pursue returns within acceptable risk parameters.

According to AllianceBernstein, the current high yields offered by sub-investment-grade corporate bonds can insulate total returns even if spreads widen and US Treasuries go higher. Furthermore, future returns could be attractive at current yield-to-worst (YTW) levels – the strategy has historically delivered almost 10% per annum over subsequent five-year periods when YTW was near the current value of 8.5% (as of 31 March 2023).

Commenting on the new listing, Noel Archard, Global Head of ETFs and Portfolio Solutions at AllianceBernstein, said: “The AB High Yield ETF broadens our offerings for clients by ultimately supplying them with a flexible vehicle to weather various market conditions. We remain focused on enhancing our ETF suite to meet our clients’ ever-evolving needs, and this launch unlocks a new opportunity to invest in additional income-generating products.”

Onur Erzan, Head of Global Client Group and Head of Private Wealth at AllianceBernstein, added: “Following the success of our initial fixed income and equity active ETFs, the addition of the AB High Yield ETF represents another exciting milestone for the ETF, Fixed Income, and broader teams at AllianceBernstein. This ETF will be actively managed by a team of Fixed Income experts whose industry knowledge, innovative technology platform, and commitment to clients is unparalleled.”

HYFI represents AllianceBernstein’s first successful mutual fund to ETF conversion. The firm made its ETF debut in September of last year with the launch of two actively managed short-duration fixed income strategies. The AB Ultra-Short Income ETF (YEAR US) and AB Tax-Aware Short Duration Municipal ETF (TAFI US), which come with expense ratios of 0.25% and 0.27%, respectively, have collectively gathered $530 million in assets since launch.