- Xtrackers by DWS creates an ETF providing dynamic exposure between high yield bonds and cash equivalent investments
- Tracking the Adaptive Wealth Strategies Risk Managed High Yield Index
- Daily allocation algorithm uses market signals to control for risk
Xtrackers by DWS has launched an ETF providing dynamic risk-controlled exposure to US dollar high-yield corporate bonds.
Xtrackers Risk Managed USD High Yield Strategy ETF (NYSE: HYRM) tracks the Adaptive Wealth Strategies Risk Managed High Yield Index, which uses a daily algorithm to dynamically adjust exposure between bonds and cash equivalent investments. It is designed to track the performance of the US dollar-denominated high yield corporate bond market during normal market conditions, and the performance of a US dollar cash position (accruing interest at the Effective Federal Funds Rate) during periods of adverse market conditions.
The Underlying Index uses a rules-based allocation mechanism to allocate between either 100% exposure to the Solactive USD High Yield Corporates Total Market Index or 100% exposure to the Solactive Fed Funds Effective Rate Total Return Index, based on quantitative market risk signals derived from measurements of price changes in the market (see Notes to Editors).
“HYRM may be an interesting way for investors to gain exposure to the USD high yield bond market with a built-in risk-management process,” said Michael Curtis, Head of US Passive Product. “Downside, or drawdown risks, are a key factor when allocating to high yield bonds, which the allocation mechanism of HYRM’s underlying index seeks to address effectively.”
The launch of this product is yet another example of Xtrackers’ continued partnership and collaboration with its key relationships with US and global investors to bring innovative products to market that serve as useful investment solutions.
“We are excited to see the continued development of Adaptive Wealth Strategies Indexes into the fixed income markets,” said Patrick Bobbins, CFA®, CIMA® of NorthCrest Asset Management*. “We appreciate the opportunity to partner with DWS Xtrackers on this risk-managed high yield strategy, and bringing our third index to market.”
The ETF has a gross/net expense ratio of 0.45%/0.30% and is designed to utilize investments in other Xtrackers ETFs in order to gain exposure to USD high yield bonds, in particular Xtrackers USD High Yield Corporate Bond ETF (NYSE: HYLB).
DWS offers a suite of six high yield bond ETFs (NYSE: HYLB, HYUP, HYDW, SHYL, ESHY and HYRM), with approximately $7.5 billion in assets under management that use rules-based methodologies to provide exposure to different levels of credit and interest rate risk. This includes Xtrackers Low Beta1 High Yield Bond ETF (NYSE: HYDW), which targets higher quality issuers that may display relatively low volatility compared with the broad market, and which in recent weeks broke through the USD 1 billion in assets under management threshold.
Notes to Editors
Xtrackers Risk Managed USD High Yield Strategy ETF (NYSE: HYRM) tracks the Adaptive Wealth Strategies Risk Managed High Yield Index. The index has a dynamic, rules-based allocation mechanism, which allocates fully between a “risky” asset and a “risk-free” asset based on market risk signals. The index aims to allocate to the risky asset when market risk is considered relatively low and to allocate to the risk-free asset when market risk is considered to be relatively high.
On each business day, the weight of the risky asset is determined by two signals derived from the Cboe Volatility Index2 (the VIX) and a trend-following momentum indicator called Moving Average Convergence Divergence measurement. Each signal has an equal vote (1) for market exit. Each signal will vote one (1) if it triggers a market exit and zero (0) if otherwise. The total exit vote is equal to the sum of all signal exit votes. If the total exit vote is larger than or equal to one (1) then market exit is deemed favorable. The weight is equal to exit vote decision unless it is locked from changing. Once a decision to enter or exit has been made, the position is locked into that decision for 10 days. The weight becomes effective 4 trading days after it is calculated.
*Adaptive Wealth Strategies Risk Managed High Yield Index is licensed for use from NorthCrest Asset Management, LLC (NCAM), a registered investment adviser and wholly owned subsidiary of Wealth Enhancement Group, LLC (WEG). Registration does not imply a certain level of skill or training. NCAM and WEG are not affiliated with DWS Group or ALPS Distributors Inc .
About DWS Group
DWS Group (DWS) is one of the world's leading asset managers with USD 1.05 trillion of assets under management (as of 31 December 2021). Building on more than 60 years of experience, it has a reputation for excellence in Germany, Europe, the Americas and Asia. DWS is recognized by clients globally as a trusted source for integrated investment solutions, stability and innovation across a full spectrum of investment disciplines.
We offer individuals and institutions access to our strong investment capabilities across all major asset classes and solutions aligned to growth trends. Our diverse expertise in Active, Passive and Alternatives asset management – as well as our deep environmental, social and governance focus – complement each other when creating targeted solutions for our clients. Our expertise and on-the-ground-knowledge of our economists, research analysts and investment professionals are brought together in one consistent global CIO View, which guides our investment approach strategically.
DWS wants to innovate and shape the future of investing: with approximately 3,600 employees in offices all over the world, we are local while being one global team. We are investors – entrusted to build the best foundation for our clients’ future.
ETF shares are not individually redeemable, and owners of shares may acquire those shares from the Fund, or tender such shares for the redemption to the Fund, in Creation Units only.
Consider each fund’s investment objectives, risk factors, and charges and expenses before investing. This and other important information can be found in the fund’s prospectus, which may be obtained by calling 1-855-DBX-ETFS (1-855-329-3837) or by viewing or downloading a prospectus at www.Xtrackers.com. Please read it carefully before investing.
Xtrackers ETFs are managed by DBX Advisors LLC (the Advisor), and distributed by ALPS Distributors, Inc. (ALPS). The Advisor is a wholly owned subsidiary of DWS Group GmbH & Co. KGaA, and is not affiliated with ALPS.
HYRM - Xtrackers Risk Managed USD High Yield ETF - Bond investments are subject to interest rate, credit, liquidity and market risks to varying degrees. When interest rates rise, bond prices generally fall. Credit risk refers to the ability of an issuer to make timely payments of principal and interest. Foreign investing involves greater and different risks than investing in U.S. companies, including currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political instability and differing auditing and legal standards. Funds investing in a single industry (or group of industries), country or in a limited geographic region generally are more volatile than more diversified funds. Investments in lower-quality ("junk bonds") and non-rated securities present greater risk of loss than investments in higher-quality securities. Performance of the Fund may diverge from that of the Underlying Index due to operating expenses, transaction costs, cash flows, use of sampling strategies or operational inefficiencies. An investment in this fund should be considered only as a supplement to a complete investment program for those investors willing to accept the risks associated with that fund. Please read the prospectus for more information.
Performance of a Fund may diverge from that of an Underlying Index due to operating expenses, transaction costs, cash flows, use of sampling strategies or operational inefficiencies. There are additional risks associated with investing in high-yield bonds, aggressive growth stocks, non-diversified/concentrated funds and small- and mid-cap stocks which are more fully explained in the prospectuses, as applicable. An investment in any Fund should be considered only as a supplement to a complete investment program for those investors willing to accept the risks associated with that fund. Please read the prospectus for more information.
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R- 088063 (2/22) DBX005108 (2/22)
1 Beta is a measure of a security’s volatility in relation to the overall market it is a part of.
2 The Cboe Volatility Index, or VIX, is a real-time market index representing the market’s expectations for volatility over the coming 30 days.