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(HYLD) Peritus High Yield ETF

Overview

How HYLD Works

The investment objective of the Peritus High Yield ETF (NYSE Arca: HYLD) is to generate a high current income with a secondary goal of capital appreciation. HYLD is sub-advised by Peritus I Asset Management, LLC. Peritus seeks to achieve the Fund’s objective by selecting a focused portfolio largely of high yield corporate debt securities that, via their coupons, generate a high, tangible income stream. Peritus takes a value-based, active credit approach to the markets, primarily focusing on the secondary market where Peritus believes there is less competition and more opportunities for capital gains. Peritus de-emphasizes relative value in favor of long-term, absolute returns.

Fund Documents

Financial Professional Documents

Portfolio Manager Commentaries

Fund Statistics & Industry Breakdown

as of 10/19/2014
  HYLD Barclays U.S. High Yield Index
Coupon 9.23% 6.97%
Yield to Maturity 10.76% 6.47%
Duration 2.62 years 4.18 years
     
Number of Holdings 69
12-Month Yield 8.00%
Current Yield 9.80%
30-Day SEC Unsubsidized Yield 9.25%
30-Day SEC Subsidized Yield 9.25%

Past Performance is not indicative of future results. HYLD statistics and industry breakdowns are for the actual HYLD security holdings as of the listed date, excluding cash, and the coupon, maturity in years, modified duration, yield to maturity, and ratings breakdown additionally exclude non-fixed income holdings, such as equities. For the purposes of the duration calculation, equity holdings have been excluded and loans assigned a duration of 0.25. Yield to Maturity is the yield if the security is held until the maturity date. Duration is the change of a fixed income security that will result from a 1% change in interest rate. HYLD uses a modified duration calculation and the Barclays High Yield Index a Macaulay duration calculation, both based on the yield to worst date. Current Yield is the bond’s annual coupon income divided by the bond’s current price. 12-Month Yield is the sum of the company’s interest and dividend payments over the last twelve months divided by the fund NAV as of the listed date, expressed as a percentage. 30–Day SEC Yield (Standardized Yield) is an annualized yield furnished by the Fund's custodian that is calculated by dividing the investment income earned by the Fund less expenses over the most recent 30-day period by the current maximum offering price. The Subsidized Yield reflects fee waivers and/or expense reimbursements recorded by the Fund during the period. Without waivers and/or reimbursements, yields would be reduced. The Unsubsidized Yield does not adjust for any fee waivers and/ or expense reimbursements in effect. If the Fund does not incur any fee waivers and/or expense reimbursements during the period, the 30-Day Subsidized Yield and 30-Day Unsubsidized Yield will be identical.

HYLD Industry Breakdown (as of 10/19/2014)

HYLD Credit Ratings

as of 10/19/2014
S&P Issuer Rating (ex-cash, equities)Holdings
BB+0.00%
BB0.00%
BB-3.22%
B+7.26%
B29.28%
B-34.92%
CCC+10.48%
CCC4.64%
CCC-3.11%
CC1.46%
C0.00%
Not Rated5.61%

The S&P Issuer Credit Ratings have been provided for the debt holdings in the HYLD ETF, excluding cash and equity investments. The Standard & Poor's Issuer Credit Rating is a forward-looking opinion about an obligor's overall financial capacity (its creditworthiness) to pay its financial obligations. In certain cases when an S&P Issuer Credit Rating was not provided, we utilized the S&P Bond, or issue specific, rating.

The credit ratings are published rankings based on detailed financial analyses by a credit bureau specifically as it relates the bond issue's ability to meet debt obligations. The highest rating is AAA, and the lowest is D. Securities with credit ratings of BBB and above are considered investment grade.

HYLD in the News

The following reprints should not be construed as an offer to sell or a solicitation of an offer to buy shares of any other funds. They are provided for informational purposes for AdvisorShares only.
09/26/2014 -

AdvisorShares Press Release, AdvisorShares Announces September 2014 Distributions

08/27/2014 -

AdvisorShares Press Release, AdvisorShares Announces August 2014 Distributions

07/12/2014 - Conway, Brendan. "Fundamental Bond ETFs Prove Tough to Tackle." http://online.barrons.com/news/articles/SB50001424053111903684104580015183707204268?mod=BOL_hp_mag

Performance -Month-End

HYLD Performance History (%) as of 09/30/2014
 NAVMarket Price ReturnBarclays U.S. High Yield Index
1 Month-3.96-4.16-2.09
3 Months-3.97-4.15-1.87
YTD2.412.173.49
1 Year5.365.257.20
2 Years(Annualized) 8.468.337.17
3 Years(Annualized) 11.0610.9711.09
Since Inception
(11/30/2010, Annualized)
8.458.368.69

Performance -Quarter-End

HYLD Performance History (%) as of 09/30/2014
 NAVMarket Price ReturnBarclays U.S. High Yield Index
1 Month-3.96-4.16-2.09
3 Months-3.97-4.15-1.87
YTD2.412.173.49
1 Year5.365.257.20
2 Years(Annualized) 8.468.337.17
3 Years(Annualized) 11.0610.9711.09
Since Inception
(11/30/2010, Annualized)
8.458.368.69

Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Returns less than one year are not annualized.

The Barclays U.S. High Yield Index is an unmanaged index considered representative of the universe of U.S. fixed rate, non investment grade debt. One cannot invest directly in an index.

Fund Distributions

Ex-DateRecord DatePay DateCash DivST Cap GainLT Cap GainReturn of CapitalTotal Distribution
10-27-14
10-29-14
10-31-14
-----
09-24-14
09-26-14
09-30-14
$0.210$0.00$0.00$0.00$0.210/per share
08-25-14
08-27-14
08-29-14
$0.348$0.00$0.00$0.00$0.348/per share
07-25-14
07-29-14
07-31-14
$0.366$0.00$0.00$0.00$0.366/per share
06-24-14
06-26-14
06-30-14
$0.339$0.00$0.00$0.00$0.339/per share
05-23-14
05-28-14
05-30-14
$0.311$0.00$0.00$0.00$0.311/per share
04-24-14
04-28-14
04-30-14
$0.312$0.00$0.00$0.00$0.312/per share
03-25-14
03-27-14
03-31-14
$0.310$0.00$0.00$0.00$0.310/per share
02-24-14
02-26-14
02-28-14
$0.296$0.00$0.00$0.00$0.296/per share
01-27-14
01-29-14
01-31-14
$0.236$0.00$0.00$0.00$0.236/per share

To view HYLD's complete distribution history, please click here.

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Why Invest in HYLD

  • Active Management Strategy - Peritus has an active management strategy, concentrating on the securities they feel offer the best value with the least risk within the company's entire capital structure. With this strategy, Peritus can address the deficiencies of many of the high yield indexes and index-based products, which don't have the ability to avoid potential defaults or sell over-valued names at large premiums and thin yields, and are often subject to arbitrary restrictions, such as tranche size constraints, that limit the investment universe.
  • Less Focus on Credit Ratings - Peritus views credit as either “AAA” or “D” (either it is expected to pay its obligations or it isn't) and places limited value on the rating agencies and their backward looking methodologies. Peritus exploits that fact that most fixed income investors continue to use ratings as one of their primary investment tools.
  • Disciplined Investment Process - Peritus’ investment ideas and research are generated internally, allowing them to search for value and avoid popular trends. Through their rigorous credit and valuation analysis, Peritus pays particular attention to businesses they see as providing an “essential” product or service, having the ability to generate free cash flow, having a manageable capital structure and/or having hard asset values that are not being reflected in the bond pricing.

5 Key Attributes

  1. Income - Peritus seeks a portfolio generating a high current income largely provided by corporate debt, focusing on the non-investment grade debt market, which typically has higher coupon cash flow yield than other asset classes, including U.S. Treasuries, investment grade bonds, and municipals.
  2. Capital Gains Potential - Peritus primarily focuses on the “secondary” market, often investing in assets at a discount to par ($100), allowing for a potential opportunity to generate capital gains in addition to current yield.
  3. Focused Diversification - The Peritus team lets the value they see in the market dictate the portfolio’s diversification, rather than accepting securities that are viewed as less desirable for the sake of diversification. As a result, HYLD’s portfolio is expected to be more focused and concentrated by industry standards.
  4. Short Duration/Maturity Profile - High yield bonds are typically issued with a maturity of five to ten years, but because Peritus largely focuses on seasoned credits, their stated duration and maturity tend to be shorter than that of the market indexes, while their actual duration is generally even shorter due to early refinancings and take-outs via calls, poison puts, and tenders. Additionally, Peritus has the ability to invest a portion of the portfolio in leveraged loans, which may reduce the fund duration even further.
  5. Expertise - Peritus’ core team averages over 19 years each of experience specializing in high yield corporate bonds and leveraged loans. In addition, Peritus’ management team has cultivated many important trading relationships over decades on Wall Street which they view as crucial to execution in the asset class.

About the Portfolio Managers

Timothy Gramatovich, Chief Investment Officer
Mr. Gramatovich, co-founder of Peritus, has nearly 30 years of experience directly involved in the high yield asset class. As the Chief Investment Officer, he leads the investment committee and is responsible for developing investment strategies, themes, and ideas. Prior to co-founding Peritus, Mr. Gramatovich was a Portfolio Manager with Smith Barney’s Asset Management Division in Los Angeles, where he managed high yield portfolios for high net worth individuals and institutions. He began his career with Drexel Burnham Lambert in 1984, assisting in the development and marketing of high yield corporate debt management products. Mr. Gramatovich is a Chartered Financial Analyst (“CFA”) charter holder and a member of the CFA Institute. He is a graduate of the New York Institute of Finance.

Ronald Heller, CEO & Senior Portfolio Manager
Mr. Heller, co-founder of Peritus, is the Senior Portfolio Manager, overseeing portfolio management and trading activities. Over the past 19 years, Mr. Heller has developed long standing relationships with dealers across Wall Street for new issue and secondary trading. He began his career in finance in 1993 with Smith Barney. Prior to Mr. Heller’s investment career, he had a seven year career in the National Football League with San Francisco, Atlanta and Seattle, retiring in 1993. Mr. Heller attended Oregon State University majoring in Kinesiology.

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Fund Basics

  • Symbol

    HYLD

  • Exchange

    NYSE Arca

  • Inception Date

    11/30/2010

  • CUSIP

    00768Y503

  • Indicative Value

    HYLD.IV

  • Options

    Yes

Manager Minutes, October 2014

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Price History

As of: 10/23/2014
NAV$48.74Closing Price$48.86
ChangeChange$-0.06
Shares Outstanding14,050,000Volume613,359
4PM Bid/Offer Midpoint$48.90Premium/Discount$0.16
Assets Under Management$684,822,419.49
Premium/Discount Historical Data

 

Top 10 Holdings

As of: 10/23/2014
Name Price Weight
SEITEL INC 9.5 4/15/2019 99.5 1.97%
CREDITCORP 12 7/15/2018 103.5 1.94%
TALOS PRODUCTION LLC/FIN 9.75 2/15/2018 104.25 1.86%
UCI INTERNATIONAL INC 8.625 2/15/2019 96 1.84%
GLOBAL TEL LINK 5/13 2ND LIEN C 11/23/20 TERM LOAN 99.458 1.80%
AMERICAN PA 02/27/19 TERM LOAN 100.625 1.75%
SITEL LLC/SITEL FIN CORP 11.5 4/1/2018 89.75 1.75%
EARTHLINK HOLDINGS CORP 8.875 5/15/2019 97.875 1.71%
TRILOGY INTL PART LLC 10.25 8/15/2016 101.375 1.70%
IRACORE INTL HOLDINGS IN 9.5 6/1/2018 80 1.65%

Shares are bought and sold at market price (closing price) not NAV and are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined), and do not represent the return you would receive if you traded at other times. Holdings and allocations are subject to risks and to change. A holding identified with an "MM" at the end of its name indicates it is a Money Market fund.

Fees & Expenses

  • Management Fee

    1.10%

  • Other Expenses

    0.13%

  • Gross Expense Ratio

    1.23%

  • Fee Waiver and/or Expense Reimbursement

    -0.02%

  • Net Expense Ratio

    1.25%*

  • *The Advisor has contractually agreed to keep net expenses from exceeding 1.35% of the Fund’s daily net assets for at least a year from the date of the Prospectus and for an indefinite period thereafter subject to annual reapproval of the agreement by the Board of Trustees.