First Trust Tactical High Yield ETF

First Trust Tactical High Yield ETF (HYLS) is an actively managed fund that holds below-investment-grade ("junk") corporate bonds and bank loans, and its main goal is current income. Most high yield ETFs simply hold bonds. HYLS's managers can also borrow to hold long positions worth up to 130% of net assets, and they can sell short up to 30%. That flexibility costs more: the expense ratio is 0.69%, about double the 0.34% average of similar funds.

• Over the year to Oct 27, 2026, HYLS returned +1.6%, 4th of 8 among similar funds.
• Its 5-year annualized return was +3.0% and its 10-year +4.1%.
• In the 2020 COVID crash it fell 22.8% and regained its old high 4.5 months after the low.
• Its worst full calendar year was 2022 (-12.8%); its best was 2019 (+14.7%).
• The deepest fall in its price history was 23% (Feb 12, 2020 to Mar 20, 2020), recovered by Aug 6, 2020.

As of Jul 31, 2026, the fund held 332 securities; the ten largest made up 12.03% of assets.

The bonds mature in 5.2 years on average (weighted by size), with an average coupon of 6.61%.

• Over the three months to Jul 31, 2026, investors withdrew a net $2.1M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.44%, +0.22%, -0.12%.

HYLS is actively managed: First Trust's managers pick holdings rather than copying an index, seeking income first and price gains second. Their benchmark is the ICE BofA US High Yield Constrained Index. At least 80% of net assets goes into high yield, or “junk,” debt rated below BBB– by S&P or Baa3 by Moody's. That includes corporate bonds, convertible bonds and bank loans. Loans can reach 40% of net assets. No more than 15% may go into loans other than first-lien floating-rate loans, which get first claim on a borrower's assets.

The unusual part is the long-short design. Managers can sell short Treasuries or corporate bonds they expect to lag. That means they borrow the bonds and sell them, hoping to buy them back cheaper. Shorts can reach 30% of net assets, and the cash buys more high yield debt, so long positions can total 130%. That works like leverage, which magnifies both gains and losses. The fund may also use credit default swap indices (CDX), contracts that act like insurance on a basket of bonds. It can use them to hedge or to add exposure.

As of July 31, 2026, the fund had 332 holdings: about 88% bonds and 12% loans, with no derivatives reported. The February 27, 2026 prospectus lists portfolio turnover of 68%, a sign of frequent trading.

• HYLS charges 0.69% a year, versus an average of 0.34% for the similar funds below (7th of 8, cheapest first).

HYLS pays monthly income from high yield bonds and loans, but its credit risk makes it a poor fit as a portfolio's main bond holding.

HYLS can add monthly income: its trailing 12-month yield was 7.42% as of October 27, 2026. That income comes with sharp drops in bad markets. The fund launched in 2013, so it has no record from 2008. In the 2020 COVID crash it fell 22.8% between February 19 and March 20, then recovered by August 3, 2020. In 2022 it fell 15.7% through September 29 and didn't recover until March 28, 2024, about 18 months later. Its worst calendar year was 2022, at -12.59%. A retiree who had to sell shares during those stretches would have locked in losses. Its cost is 0.69% a year, compared with 0.05% for SPHY and 0.08% for USHY. Past results don't predict future ones, 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).