DWS has unveiled a new high yield corporate bond ETF in the US targeting issuers whose credit ratings are near the boundary of investment-grade status.

The ETF is suited for yield-seeking investors who do not wish to venture into the riskiest segments of the non-investment-grade universe.

The Xtrackers USD High Yield BB-B ex Financials ETF (BHYB US) has been listed on Cboe BZX Exchange with an expense ratio of 0.20%.

The fund tracks the ICE BofA BB-B Non-FNCL Non-Distressed US HY Constrained Index which is constructed from an initial universe of US dollar-denominated, below-investment-grade corporate bonds issued in the US market. Qualifying securities must have a fixed coupon, a minimum of one year to maturity, and at least $250 million in face value outstanding.

The methodology excludes financial issuers and limits the credit ratings of its constituents to between ‘BB1’ and ‘B3’, based on average ratings from Moody’s, S&P, and Fitch. It also requires an option-adjusted spread (the difference between the bond’s interest rate and the risk-free rate, adjusted for embedded options in the bond) of less than 10%.

Constituents are market-capitalization weighted with a 2% cap for any individual issuer. If there are fewer than 50 issuers, each is equally weighted.

The ETF makes distributions to investors on a monthly basis.