Prudential launches actively managed high-yield ETF

Sep 28th, 2018 | By | Category: Fixed Income

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Prudential Global Investment Management (PGIM) has launched its second actively managed ETF – the PGIM Active High Yield Bond ETF (PHYL US) – following the debut of its ETF platform earlier this year.

PGIM Active ETFs

PHYL is sub-advised by PGIM Fixed Income, which manages some $710 billion in assets globally.

The fund seeks to generate total return through a combination of current income and capital appreciation by investing primarily in US dollar-denominated high-yield bonds.

It will seek to outperform the Bloomberg Barclays US High Yield Very Liquid Index.

“Having the benefit of scale has provided us the flexibility to expand our platform and thoughtfully develop strategies in a variety of vehicles that meet client demand,” said Stuart Parker, President and CEO of PGIM Investments.

“When it comes to ETFs, our focus is on developing competitive products that align with our core investment capabilities.”

The ETF’s portfolio is built using bottom-up credit research, focused on identifying credits with solid fundamentals, while managing risk. The fund’s managers can invest in both sovereign and corporate bonds from issuers globally. One-fifth of the portfolio may be assigned to bonds denominated in foreign currencies; however, currency risk will be hedged back to the US dollar.

“We see a lot of opportunity for an experienced active manager with a core capability in high yield bond investing,” added Parker. “Our investors couldn’t be in more capable hands—our portfolio management team has the experience, credit research, and risk management capabilities critical to investing in this sector.”

The ETF comes with an expense ratio of 0.53%, 14 basis points below the average active high yield ETF, according to Morningstar data.

PGIM Investments’ first ETF, the PGIM Ultra Short Bond ETF (PULS US), was launched on NYSE Arca in April and has since grown to $64 million in assets under management. It provides exposure to a diversified portfolio of ultra-short fixed income securities and seeks to outperform the ICE BofAML USD Libor 3 Month Index.

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