Advisor Shares Peritus High Yield is riskier than most of its peers. By Carolyn Bigda, Contributing Writer From Kiplinger's Personal Finance, July 2014 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. Their fund currently occupies the lower rungs of the junk-bond credit spectrum, which explains its lofty 7.9% yield. It has 69% of its assets in bonds with single-B ratings (compared with 39% for the category average), says Morningstar, and nearly 30% in unrated bonds and those rated below B. But Gramatovich argues that rating agencies have a size bias, and as a result the bonds Peritus holds receive lower ratings than they deserve. As with any actively managed fund, you’ll have to trust the managers, Gramatovich and Heller, to get their research right. That’s especially so in light of the fund’s 1.25% annual fee, which is more than twice the average for junk-bond ETFs.