MHYB: A Steady Income Anchor in a Volatile Rate Climate

As central banks worldwide grapple with inflation, geopolitical tensions, and shifting economic policies, investors seeking income face a precarious balancing act: how to generate yield without overexposure to interest rate risk or default vulnerability. Enter the Mackenzie Global High Yield Fixed Income ETF (MHYB), a fund engineered to navigate these choppy waters through active management, global diversification, and a sharp focus on risk-adjusted returns. Here's why MHYB stands out as a resilient income vehicle for today's uncertain markets.

Active Management: Navigating Risks with Precision

MHYB is managed by Mackenzie's seasoned Fixed Income Team, which employs a rigorous credit selection process to identify high-yield bonds that offer favorable risk/return profiles. Their strategy centers on avoiding lower-quality CCC-rated bonds—which historically have the highest default rates—and favoring higher-quality BB and B-rated issues, especially those with shorter durations. This approach minimizes exposure to both interest rate risk (via shorter maturities) and economic downturns (via credit quality).

Key examples include Coinbase's 2031 bonds, benefiting from the cryptocurrency sector's recovery, and MoneyGram's leveraged loans, backed by strong digital revenue growth. By focusing on companies with recovery potential or transformative initiatives, the fund aims to sidestep sectors overly sensitive to economic slowdowns.

Global Diversification: Spreading Risk Across Horizons

The fund's global mandate allows it to capitalize on divergent monetary policies and opportunities across regions. For instance:
- Brazil: Exposure to government bonds, which offer valuation opportunities amid central bank currency interventions.
- New Zealand: Benefiting from aggressive rate cuts (e.g., 125 basis points in 2024), creating a yield-friendly environment.
- North America: Strategic allocations to short-end Canadian corporate bonds, hedging against U.S. rate hikes and a stronger dollar.

This diversification not only reduces concentration risk but also leverages regions where high-yield bonds are undervalued or poised for recovery.

Risk-Adjusted Returns: Volatility Mitigation in Action

While MHYB's exact Q2 2025 Sharpe Ratio and standard deviation are not disclosed, its strategies align with maximizing risk-adjusted performance. High-yield bonds historically have delivered equity-like returns with half the volatility, a critical advantage in volatile markets. The fund's focus on shorter-duration bonds and quality credits aims to lower standard deviation compared to broader high-yield benchmarks.

The Sharpe Ratio—measuring excess return per unit of risk—would highlight how MHYB's active management has enhanced returns relative to its volatility. Even in rising rate environments, the fund's duration management (e.g., shorter maturities) helps insulate against price declines.

Distribution Sustainability: Steady Income Through Uncertainty

MHYB's May 2025 distribution of $0.07740 per unit underscores its commitment to consistent income. The fund's portfolio of leveraged loans and high-yield bonds, which typically offer floating rates or fixed coupons, provides a buffer against rate volatility. For example, MoneyGram's floating-rate loans benefit from rising rates, while global diversification smooths out regional economic headwinds.

ESG Integration: Balancing Yield with Sustainability

ESG considerations are woven into MHYB's strategy, with at least 65% of assets covered by metrics like MSCI ESG Ratings and Weighted Average Carbon Intensity (WACI). The fund avoids sectors tied to tobacco, weapons, or adult entertainment and prioritizes issuers with strong ESG profiles, such as Denali Term Loan, which supports waste management and recycling initiatives.

While specific ESG ratings for MHYB are not disclosed, its adherence to global standards positions it favorably for investors seeking income without compromising on sustainability.

Why Act Now?

The current environment—marked by Fed caution, geopolitical shifts, and diverging global policies—creates both risks and opportunities for income investors. MHYB's blend of active management, global diversification, and ESG integration offers a compelling way to:
1. Mitigate interest rate risk via duration discipline.
2. Leverage regional yield disparities across developed and emerging markets.
3. Secure sustainable distributions through high-quality, diversified holdings.

For investors seeking to anchor their portfolios with resilient income, MHYB is a fund worth considering. Its focus on quality, flexibility, and risk-aware strategies positions it to thrive in even the most uncertain markets.

Final Call to Action: With MHYB's strategic yield opportunities and robust risk management, now is the time to act. Explore its holdings, risk metrics, and distribution history to see how it can fortify your income strategy.