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Top 10 High-Yield, Emerging-Market Bond ETFs

Stocks in this article: HYGJNKPHBBKLNHYLDEMBPCY

PHB Top Ten Holdings & Weightings

  1. Sprint Nextel 6%:                                             1.61%
  2. International Lease Finance 6.375%:               1.57%
  3. Weyerhaeuser 7.375%:                                   1.56%
  4. Ford Motor Credit Co 7%:                               1.26%
  5. Supervalu 8%:                                                 1.21%
  6. Dean Foods Co 7%:                                        1.17%
  7. International Lease Finance 8.25%:                 1.15%
  8. Ford Motor Credit Co 8%:                               1.15%
  9. Discover Bank 8.7%:                                        1.04%
  10. Penney J C Corp 5.65%:                                 1.04%

 

BKLN (PowerShares Senior Loan Portfolio ETF) is linked to the S&P/LSTA Leveraged Loan 100 Index. The index tracks the market-weighted of the largest institutional leveraged loans. It was launched recently in March 2011. The expense ratio is .83% and has AUM of $118M. The average daily trading volume is over 125K shares. Average credit ratings are evenly divided between BB and B with the average duration around 5 years. With the history short we can only repost what PowerShares has listed as the return for the "index" over the past year at 7.81%.

Data as of March 2011

BKLN Top Ten Holdings & Weightings

1.    First Trust Senior Floating Rate                       3.69%

2.    ING Prime Rate Trust                                      3.63%

3.    Texas Competitive Electric 3.79%                    2.20%

4.    Intelsat Jackson Holdings SA 5.25%                2.19%

5.    Community Health Systems 2.65%                  2.09%

6.    First Data Corporation 3.012%                         2.01%

7.    CSC Holdings (Cablevision) 3.512%                1.88%

8.    Clear Channel Communications 3.912             1.85%

9.    Fist Data Corporation 3.012%                          1.81% 10.  HCA Inc 2.53%                                                            1.88%

 

HYLD (Peritus High Yield ETF) is a relatively new entry launched in late 2010 by Advisor Shares and former San Francisco 49er tight end (should you care) Ron Heller. It is an "active" ETF meaning, like many mutual funds, there isn't a fixed index. More is expected of an actively managed product and that's reflected in the higher expense ratio of 1.35%. As a new fund AUM is low but rising and now stands at $39M making it profitable for both the advisor and sponsor. This is important since new products like this need to be successful to endure and assure investors it's a going concern. With only a brief history of trading since December 2010, HYLD has returned 6.31%. Average daily trading volume is only around 12K shares. Credit quality for many bonds is unavailable while the average current duration is less than 7 years. Remember, an Active ETF can change its holdings anytime and without much history and credit ratings you can only regard this issue as riskier.

Data as of June 2011

HYLD Top Ten Holdings & Weightings

  1. United Refinancing 10.5%:                              5.55%
  2. SGS International 12%:                                    4.99%
  3. Rotech Healthcare 10.5%:                               4.60%
  4. Harland Clarke Holdings 9.5%:                        4.58%
  5. DynCorp International10.375%:                       4.31%
  6. Eastman Kodak.9.75%:                                    4.30%
  7. Central European Finance 9.125%:                 4.30%
  8. Radnet 10.375%:                                             4.27%
  9. Icon Health & Fitness 11.875%:                       3.99%
  10. Dean Foods Co  9.75%:                                  3.96%

EMB (iShares JP Morgan Emerging Market Bond ETF) the index is a US dollar based benchmark tracking actively traded emerging market debt instruments. The fund was launched in December 2007. The expense ratio is .60%, AUM exceeds 2.7B with average daily trading volume around 250K shares. Performance as of quarter end March 2011 was .72% and the one year return through that period was 7.89%. The average duration of the portfolio is around 13 years with the average credit rating for roughly half the holdings of BBB with the balance of lower quality overall. 

Data as of June 2011

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