Federated Hermes Short Duration High Yield ETF

Federated Hermes Short Duration High Yield ETF (FHYS) is an actively managed fund of high-yield, or “junk,” bonds and loans. It aims to keep average effective duration (a gauge of interest-rate sensitivity) under three years. Its trailing yield was 6.02% as of October 27, 2026, paid monthly. The catch is cost and size: its 0.50% expense ratio is above the 0.30% average of similar funds, and it held $55.1 million as of August 31, 2026.

• Over the year to Oct 27, 2026, FHYS returned +3.3%, 2nd of 8 among similar funds.
• Its worst full calendar year was 2022 (-7.3%); its best was 2023 (+11.0%).
• The deepest fall in its price history was 11.6% (Dec 31, 2021 to Jul 6, 2022), recovered by Nov 3, 2023.

As of Aug 31, 2026, the fund held 277 securities; the ten largest made up 9.45% of assets.

The bonds mature in 4 years on average (weighted by size), with an average coupon of 6.29%.

• Over the three months to Aug 31, 2026, investors added a net $4.1M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.15%, -0.04%, +1.03%.

FHYS does not track an index. Federated Hermes’ investment team picks holdings it believes offer attractive risk and return. At least 80% of net assets must be rated below investment grade, which means credit agencies see a higher risk that the borrower misses payments. The fund can hold high-yield corporate bonds, floating-rate term loans (their interest rates reset as market rates move), covenant-lite and syndicated bank loans, and collateralized loan obligations, which are pools of loans packaged into securities. Everything is in U.S. dollars, but issuers can be foreign, including in emerging markets.

Picks are based on research into each issuer’s finances, business and product strength, competitive position and management. There is no maturity limit. In normal markets, though, the team expects average effective duration to stay under three years, and it adjusts duration based on its view of interest rates. Duration estimates how much a bond’s price moves when rates change, so a shorter duration means smaller swings. Portfolio turnover was 46%.

As of August 31, 2026, the fund owned 277 holdings: 85.54% bonds and notes and 12.79% loans. Their average maturity was 4 years and their average coupon was 6.29%. The top 10 made up 9.45%, led by CCO Holdings at 1.22%. The fund may use futures, options and swaps, which can create leverage, but it held none on that date.

• FHYS charges 0.5% a year, versus an average of 0.3% for the similar funds below (7th of 8, cheapest first).
• Of that, 0.6% is the management fee; the rest covers other fund expenses.
• The fee includes a 0.11% waiver from the adviser, which may end.
• Using the prospectus's standard example, $10,000 invested would cost about $62 in the first year and $762 over 10 years (assuming a 5% annual return).

The fund’s stated goal is high current income, paid monthly from junk bonds and loans, rather than stability.

FHYS could add monthly income: its trailing 12-month yield was 6.02% as of October 27, 2026. Because its duration is short, rising rates tend to hurt it less than longer-term bond funds. Junk bonds still carry credit risk, though, and can fall along with stocks. The fund launched in December 2021, so it has no record in the 2008 crisis or the 2020 crash. In 2022 it fell 11.6% from its peak to July 6, 2022, and took about 16 months, until November 3, 2023, to recover. Its worst calendar year was 2022, when it returned -7.27%.

A retiree who had to sell in mid-2022 would have locked in losses. That is why some retirees keep near-term spending money in cash or high-quality bonds. Costs are 0.50% a year, or $62 in the first year on $10,000 under the SEC’s standard example. Past results don’t predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by bond funds with the closest average maturity and issuer mix (N-PORT).