ETF Watch: IndexIQ Plans High-Yield, Low-Vol Bond Fund

Planned ETF will join offer a unique twist on the fixed-income market.
Reviewed by: Staff
Edited by: Staff

IndexIQ recently filed for an ETF that will target bonds offering exposure to yield and low volatility. The IQ U.S. High Yield Low Volatility ETF (HYLV) will track an index of U.S.-domiciled high-yield debt.

The index will cover below-investment-grade bonds with fixed-rate coupons that meet minimum outstanding face value, minimum maturity and liquidity requirements. The index methodology ranks all the bonds in its universe based on their marginal contribution to risk and selects a certain percentage of the lowest-ranked bonds—meaning those with the lowest credit risk—for the index. Components are weighted based on market value, according to the prospectus.

The proposed fund’s approach is unique among fixed-income ETFs in that it targets a higher-risk portion of the bond space while also seeking to limit that risk at the same time by targeting the bonds with the lowest credit risk among the high-yield segment.

The filing does not include an expense ratio of listing exchange.

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