Junky Bonds Deliver Rich Yield in This Actively Managed ETF

Advisor Shares Peritus High Yield is riskier than most of its peers.

The vast majority of exchange-traded funds track an index and charge rock-bottom fees. Advisor Shares Peritus High Yield is one of a rare breed of ETFs that does neither—without any harm, so far, to its shareholders. Over the past year, Peritus outpaced the average junk-bond ETF by 3.8 percentage points.

In the relatively small junk-bond market, active management works better than indexing, says Peritus co-manager Timothy Gramatovich. For example, SPDR Barclays High Yield Bond, one of the biggest junk ETFs, tracks an index that owns bond issues with outstanding values of at least $500 million. Gramatovich and co-manager Ron Heller can—and do—invest in smaller, potentially more rewarding issues.

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Contributing Writer, Kiplinger's Personal Finance
Carolyn Bigda has been writing about personal finance for more than nine years. Previously, she wrote for Money, and is a regular contributor to the Chicago Tribune.