New York City-based ClearShares is set to launch an actively managed fixed income ETF providing multi-sector bond exposure while targeting the middle of the yield curve.
The ETF seeks balanced exposure to interest rate risk by targeting bonds in the middle of the yield curve.
The ClearShares Piton Intermediate Fixed Income ETF (PIFI US) will begin trading on NYSE Arca on 2 October 2020.
It will be the issuer’s third ETF.
Piton Investment Management, an NYC-based advisor specializing in fixed income investments, will serve as sub-adviser to the fund.
The fund will focus on maximizing total return while striving to deliver conservative goals of income generation, capital preservation, and liquidity.
US dollar-denominated investment-grade corporate bonds, Treasury securities, and government agency debt will all be eligible for inclusion, with the sub-advisor typically selecting instruments from issuers that have at least $1 billion in outstanding debt issuance.
The fund will maintain a dollar-weighted average portfolio maturity of three to ten years, thereby seeking to provide an interest-rate-risk profile that is lower than many “core” intermediate fixed income ETFs currently available in the marketplace today.
Piton will make use of top-down macroeconomic research to determine the overall risk profile for the ETF including its targeted duration range, relative asset allocation decisions, and credit exposure. Bottom-up analysis will be used to select securities based on a forward-looking assessment of the bond’s contribution to the ETF’s duration and sector allocation. Exposure to any one corporate issuer is capped at 10%.
Piton’s prevailing investment thesis will be derived from assessments of core macroeconomic factors such as economic data and trends, monetary, fiscal, and regulatory policy measures, market valuations and volatility, inflation, supply and demand, and intangible elements that it believes may influence markets.
The portfolio management team will process these assessments to formulate an outlook for interest rates, sector strengths or weaknesses, and liquidity, along with external research to set the current thesis. The investment thesis will typically be revisited weekly as part of the ongoing management of the fund.
Brian Lockwood, Head of Fixed Income at Piton Investment Management, commented, “The PIFI strategy can be a ‘cornerstone’ fixed income solution for any asset allocation. The highly liquid components, diversification, and moderate interest rate risk provide an important portfolio ‘safety valve’ while allowing investors to participate in bond market returns and income generation.”
Tom Deegan, CEO of ClearShares, added, “ClearShares is very excited to partner with Piton on the PIFI ETF. Piton was a natural partner for the ClearShares platform given their longstanding leadership in the fixed income advisory space and experience delivering their intermediate fixed income strategy. PIFI will be a great addition to the ClearShares family of ETFs.”