Amplify partners with Samsung on short-duration income ETF

Nov 20th, 2023 | By | Category: Fixed Income

Amplify ETFs has launched a new fund in partnership with Korea’s largest asset manager, Samsung Asset Management, offering investors access to an institutional-grade cash management strategy.

Amplify partners with Samsung AM on SOFR income ETF

SOFR replaced LIBOR in June 2023 as the standard interest rate benchmark for dollar-denominated derivatives and loans.

The Amplify Samsung SOFR ETF (SOF US) has been listed on NYSE Arca, coming to market with $50 million in initial assets.

The actively managed fund aims to deliver a total return, before fees and expenses, that at least matches the Secured Overnight Financing Rate (SOFR).

Updated daily by the Federal Reserve Bank of New York, the SOFR represents the average cost paid by banks to borrow cash through overnight loans collateralized by Treasury securities. It replaced LIBOR in June 2023 as the standard interest rate benchmark for dollar-denominated derivatives and loans. As of 17 November, the SOFR was 5.32%.

Sub-advised by Samsung AM’s institutional short-term interest income team, the ETF is designed to deliver higher monthly yield potential and total return over cash without materially increasing duration risk.

This objective is primarily achieved through investments in repurchase agreements (repos) with highly creditworthy financial institutions, although the ETF may also invest in short-term notes which expire within a year as well as engage in over-the-counter (OTC) interest rate swap agreements.

The ETF comes with an expense ratio of 0.20%. Income is distributed to investors on a monthly basis.

Christian Magoon, CEO of Amplify ETFs, commented: “Investors are turning to money market funds and other income-producing investments due to increased income potential and equity market uncertainty. We are excited to be the first US ETF issuer seeking to deliver the closely watched SOFR monthly income and total return after fees and expenses. Our strategic partnership with Samsung AM has produced this timely opportunity for US investors, and it is a great honour to collaborate with Samsung AM on their first ETF initiative in the US.”

Bongkyun Suh, CEO of Samsung Asset Management, added: “We are proud to build on the legacy of Samsung Asset Management through our New York office by launching our first US-listed ETF with our strategic partner Amplify ETFs.”

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