It is an actively managed ETF that invests in US dollar-denominated speculative-grade (high-yield) corporate bonds. It seeks to outperform its benchmark through a systematic process with index discipline.

It suits investors who want high interest income along with the potential for outperformance through active credit selection.

It is an ETF run with an active management approach by John Hancock.

It selects speculative-grade corporate bonds through a three-step process of fundamental credit assessment, portfolio construction, and active management. It is a sub-advisor management structure that maintains sector and credit-rating allocations similar to the benchmark while seeking outperformance through individual issuer selection.

• An actively managed structure with index-style discipline
• Broad issuer diversification that helps mitigate individual default risk

Assets under management (AUM) stand at $137.0M, and the expense ratio is 0.52% per year.

Compared with passive high-yield ETFs such as HYG and USHY shown in the table, its differentiator is active credit selection, and its credit-rating range differs from that of LQD and USIG, which focus on investment-grade bonds.

Given the nature of high-yield corporate bonds, prices fluctuate with the interest rate and credit spread environment, and because of active management, the performance gap versus the benchmark can vary from period to period.

When credit spreads are stable, inflows seeking interest income tend to appear, while in periods of heightened credit wariness, volatility in fund flows tends to increase.

Its strength is the potential for outperformance through active credit selection, and its weakness is the credit and liquidity risk inherent in speculative-grade corporate bonds.

Large passive high-yield ETFs such as HYG and USHY shown in the table offer abundant liquidity, and their credit-rating range differs from products centered on investment-grade corporate bonds such as LQD and USIG. Beyond these, investors can also consider HYLB as an alternative to active high-yield, ANGL and FALN (specialized in fallen angel bonds) for a stronger default-avoidance orientation, and HYS and SJNK for those who prefer short duration.

Here are the points to review before investing in JHHY. Given the nature of an active high-yield ETF, investors should check both credit risk and the variability of management performance, and it is also wise to understand in advance how its fees and management approach differ from passive high-yield ETFs.

The key risks are the credit and liquidity risk inherent in speculative-grade corporate bonds and the possibility of deviating from the benchmark due to active management. During an economic slowdown, wider credit spreads can increase price volatility.

It is a suitable choice for investors who want high interest income and the potential for outperformance through active credit selection. However, the credit risk inherent in speculative-grade corporate bonds should be factored in beforehand.