YieldShares High Income ETF: 8.7% Yield, Passive Exposure To CEFs

Published Sun, 23 Jun 2019 13:57:59 -0400 on Seeking Alpha

YieldShares High Income ETF (NYSEARCA: YYY) is an income-focused exchanged traded fund that tracks a basket of closed-end-funds, essentially an "ETF of CEFs". One of the advantages of CEFs is that it's a good structure to implement illiquid strategies across various asset classes, and often times, these are the types of securities that offer the highest yield, which is the focus of YYY. The YieldShares High Income ETF is comprised of 30 CEFs selected by overall highest fund yield, discount to net asset value, and liquidity. The result is a diversified portfolio across investment strategies and asset classes that currently yields 8.7% and makes monthly distributions. This article looks at the characteristics of YYY including the performance metrics for its underlying holdings.

YYY weekly price chart. Source: FinViz.com
YYY Key Stats
The first thing to note is that within the 30 CEFs, the total exposure breakdown is about 25% equities and 75% bonds. The top 10 CEFs together represent 48% of the total weighting and the top holding is given a 4.6% weight. There's relatively broad diversification across global regions with 28% of underlying investments outside North America. On the other hand, there is a concentration in the equity holdings among energy sector stocks at 49%. In the bond holdings, nearly 72% of the securities have a "non-investment grade" credit rating below BBB, which simply reflects the source of the aggregate high yield.

YYY stock and bond... Read more