T. Rowe Price launches active USD high yield ETF

Nov 1st, 2022 | By | Category: Fixed Income

T. Rowe Price has introduced its fourth actively managed fixed income ETF, a fully transparent fund providing access to the firm’s seasoned USD high-yield bond strategy.

Kevin Loome, portfolio manager of T. Rowe Price’s USD high-yield bond strategy.

The T. Rowe Price US High Yield ETF (THYF US) has been listed on NYSE Arca with an expense ratio of 0.56%.

The fund is managed by Kevin Loome who has 29 years of investment industry experience including 16 years at T. Rowe Price.

It seeks to provide total return and, secondarily, current income by investing primarily in US dollar-denominated corporate bonds with sub-investment-grade credit ratings.

Other income-producing instruments including bank loans, convertible securities, and preferred stocks may also be held to a lesser extent, while up to 20% of the portfolio’s total assets may be allocated to non-US dollar-denominated securities.

In building the portfolio, Kevin Loome utilizes a fundamental, bottom-up credit selection process, combined with forward-looking research to identify a concentration of high-conviction total return opportunities. The income provided by the bond and the bond’s appreciation potential, as well as the issuer’s ability to make coupon and principal payments, are also evaluated.

The fund may purchase securities of any maturity or duration, and its weighted average maturity and duration will vary with market conditions.

Kevin Loome, Portfolio Manager at T. Rowe Price, said: “The US High Yield ETF is guided by our experienced team of high yield professionals, the core of which has worked together for over 15 years and managed through multiple market cycles. We look forward to delivering our active, flexible, and concentrated investment approach in the ETF format so that clients who prefer ETFs can seek to benefit from our best ideas.”

Tim Coyne, Head of ETFs at T. Rowe Price, added: “With the addition of a new fixed income ETF, we continue to grow our capabilities and equip investors with an even greater range of compelling strategies in the ETF format. The US High Yield ETF is designed to find another way to access our time-tested fixed income strategies that can help meet clients’ portfolio needs.”

The strategy has returned 3.65% per annum since its inception in May 2013 compared to 3.24% for the benchmark ICE BofA US High Yield Constrained Index (data as of the end of September). Over the past year, however, it has plunged by -17.07%, more than the benchmark’s loss of -14.04%.

T. Rowe Price debuted its first active fixed income ETFs in 2021 by launching a trio of funds delivering access to core portfolio strategies including US aggregate, unconstrained, and ultra-short investment approaches

The firm also recently completed an SEC filing for an ETF that invests in floating-rate bonds which is expected to list later this year.

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