SHYD is passively managed to hold high-yield, tax-exempt municipal bonds with 1-12 years left to maturity. In the corporate debt space, these would be considered intermediate debt, so investors should be aware that this fund defines short-term somewhat differently from its peers. The underlying index aims to provide a more liquid portfolio of muni bonds by targeting a weight allocation of 70% in high-yield, 20% in BBB- rated, and 10% in A- rated securities. The index weights its components by market value and rebalances monthly. The fund uses a sampling method in tracking the index, which means it will invest in a sample of securities that collectively have an investment profile similar to that of the underlying index. Prior to March 1, 2022, the fund tracked the Bloomberg Municipal High Yield Short Duration Index. Then until November 30, 2022, the fund used a transition index to gradually broaden its exposure before tracking its current index.
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