T. Rowe Price recently announced the launch of the U.S. High Yield ETF (THYF), an actively managed bond fund that began trading on the NYSE Arca. This is the fourth actively managed fixed-income ETF for the fund firm. The ETF follows the same process as its mutual fund counterpart, the T. Rowe Price U.S. High Yield Fund (TUHYX). The strategy is designed to provide a concentrated, yet balanced, portfolio primarily focused on U.S. high-yield bonds or bonds that are considered below investment grade. Both the ETF and mutual fund are managed by Kevin Loome, CFA, who has been at the firm for 16 years. Loome utilizes a disciplined, fundamental, bottom-up credit selection process, combined with forward-looking research to identify a concentration of high-conviction total return opportunities. While the fund mainly consists of high-yield corporate bonds, it may also include other income-producing instruments such as bank loans, convertible securities, and preferred stocks. 

Finsum:T. Rowe Price added to its active fixed-income ETF lineup with the launch of the T. Rowe Price U.S. High Yield ETF (THYF).

A niche? Hey, almost everyone has one. So why not fixed income ETFs – non-core fixed income, especially, which “play an expanded role in portfolio construction” for institutional investors, according to the results of a survey conducted by State Street Global Advisors, reported etfdb.com.

According to the report, The Role of ETFs in a New Fixed Income Landscape, of the 700 global institutional investors SSGA surveyed with an eye on upping their exposure to high-yield corporate debt over the next 12 months, 62% likely will do so through ETFs. In contrast, only 27% of investors significantly tapped into ETFs to build their allocations to non core fixed income like high yield last year.

“The increase from just over a year ago is remarkable,” the report said.

Among larger institutions, well, the momentum especially reverberates, according to etftrends.com. Sixty eight percent of respondents generating more than $10 billion in assets indicated they’re likely to leverage ETFs to erect new exposures to high yield corporate credit.

“Our conversations with investors have reinforced what we already knew – there is significant demand for more targeted fixed income products,” said Tony Kelly, an ETF industry leader. “Our initial product suites aim to create a full toolkit for high-yield investors looking to implement their specific views on the market, and we anticipate extending this approach to other fixed income asset classes.”

Interest in directing indexing’s, well, titan

Direct indexing has drawn the attention of the titans of the asset management industry – and the reasons are obvious, according to wealthytrails.com.

Do tell.

Will do. There’s been a steady erosion of the fee management of mutual funds and exchange traded funds stemming from the escalation of ETFs themselves. Room is scant for addition products with more than 2,000 US ETFs and 5,000 US equity mutual funds, based exclusively on a universe of just 3,000 stocks. There’s a search for new revenue generating business areas by the industry. What’s more, interest by clients in customized portfolios, which is burgeoning, is on the radar.

Asset managers, shucking aside a commingled vehicle, execute direct indexing on the behalf of clients by assuming positions reflecting a representative samples of underlying index constituents, according to impactinvresting.com.

What does this approach yield? Customization, which abets flexibility. That includes pinpointing the index to track and exposures to circumvent -- or avoid – and potential tax advantages. That way. You can opt for the actual ingredients and directly call the underlying equities your own. Consequently, you don’t have to make purchases elsewhere.