PHYL Profile
The PGIM Active High Yield Bond ETF is strategically designed to offer investors exposure to a diversified portfolio of high-yield bonds, focusing on securities that fall below investment grade. Under normal market conditions, the fund commits at least 80% of its investable assets to bonds with lower credit ratings and other investments that possess similar economic characteristics. This approach aims to capture higher yields associated with riskier credit profiles, while diversifying across a broad array of high-yield securities.
The fund’s investment strategy encompasses bonds that are currently rated below investment grade, including those rated in the lower categories or, in some cases, unrated bonds deemed by the Subadviser to be of equivalent quality. It also has the flexibility to invest in securities undergoing bankruptcy proceedings or those in default concerning principal or interest payments. This inclusion of distressed and defaulted securities allows the fund to potentially benefit from significant recovery values, though it does introduce higher credit risk.
Managed by PGIM, the fund employs an active management approach to navigate the complexities of the high-yield bond market. The Subadviser leverages in-depth credit analysis and market insights to identify opportunities in both performing and distressed credit sectors. This active strategy seeks to maximize returns while managing the inherent risks associated with lower-rated bonds, aiming to deliver value through strategic credit selection and risk management.
As a result of its focus on high-yield, below-investment-grade bonds, the PGIM Active High Yield Bond ETF offers investors a higher potential return compared to investment-grade bonds, but with increased credit risk. The fund’s diversification across a range of high-yield securities and its capacity to invest in distressed assets provide a unique opportunity for investors seeking enhanced income in a volatile credit environment. However, potential investors should consider the higher risk profile and the fund’s exposure to credit market fluctuations when evaluating its suitability for their investment portfolios.
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