This is an actively managed bond ETF that invests most of its net assets in below-investment-grade high yield bonds and bank loans to pursue distribution income. It selects securities broadly, with no constraints on sector, country, or security type.

It suits investors who seek high distribution income and are willing to accept the credit risk and volatility typical of high yield.

The ETF is actively managed by Principal.

The fund invests most of its net assets in below-investment-grade bonds such as high yield corporate bonds and bank loans, and it is actively managed with no constraints on sector, country, or security type. Its aim is to provide current income within a diversified risk profile, and the management focus is on selecting issuers with defensive quality.

• Unconstrained, broad-based high yield management
• Risk management through a defensive quality bias

Assets under management (AUM) stand at $599.9M, and the expense ratio is 0.39% per year.

Compared with similar income ETFs such as INCM and IYLD, the main points of comparison are asset composition and credit exposure.

High yield bonds are driven not only by the direction of interest rates but also by credit spreads and the economic outlook. They generally strengthen in risk-on phases and weaken when concerns about an economic slowdown grow. Their volatility tends to be higher than that of investment-grade bonds.

Fund flows into high yield diverge sharply depending on risk appetite and the credit environment, and in high-rate environments money seeking high distribution income sometimes flows in. It is also worth noting that when recession fears grow, money can leave quickly as investors avoid credit risk.

High distribution income and broad active selection are its strengths, while the credit risk and volatility typical of high yield are considerations.

Direct substitutes for pure high yield exposure include lower-cost passive products such as HYG, JNK, and USHY, which track high yield indexes broadly. For a focus on issuers whose credit ratings are improving, fallen angel ETFs such as ANGL are also worth comparing. The three products shown in the table, INCM, IYLD, and MDIV, hold not only bonds but also multi-asset income such as preferred stocks and REITs, so their asset composition differs. For this ETF, the differentiating factor is its unconstrained, broad-based active management.

Here are the points to review before investing in YLD. The high distribution income is attractive, but credit risk, economic sensitivity, and liquidity should be confirmed in advance. It is also a good idea to compare it with similar high yield and income products.

Issuer credit risk and wider credit spreads from an economic slowdown are the main drivers of short-term performance, and in a market freeze, shrinking liquidity can cause larger price swings. High distribution income comes with correspondingly high risk.

It is a suitable candidate for investors who want high distribution income and are willing to accept credit risk. If cost and simple index tracking are the priority, passive products such as HYG and JNK are the better fit. If you trust the manager's active selection skill, it is advisable to compare this fund alongside them before choosing.