What Is a Yield Pick-Up ETF?

Yield pick-up refers to the additional yield (income) an investor can obtain by moving from a lower-yielding bond to a higher-yielding bond (the difference is the “pick-up"). A Yield Pick-Up ETF is therefore an ETF designed to provide a higher level of yield than a more conservative bond exposure by investing in bond segments that typically offer yield uplift (for example, by taking on longer maturities and/or lower credit quality). The key point is that the higher yield usually comes with additional risk (commonly greater interest-rate sensitivity and/or credit risk) so prices can fluctuate more and losses are possible.