Redwood launches ETF units of active preferred share funds

Mar 16th, 2017 | By | Category: Fixed Income

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Toronto-based Redwood Asset Management has launched two income ETFs targeting exposure to the US and Canadian preferred share markets – the Redwood US Preferred Share ETF (RPU) and the Redwood Floating Rate Preferred ETF (RPS). The funds, which are actively-managed versions of two of the firm’s existing mutual funds, have been listed on Canada’s NEO Stock Exchange.

Peter Shippen, President and Chief Executive Officer of Redwood Asset Management.

Peter Shippen, President and Chief Executive Officer of Redwood Asset Management.

“Today’s launch of these two funds on NEO represents an important expansion of Redwood’s product capabilities, and is the first of a series of ETFs we will be bringing to market” said Peter Shippen, President and Chief Executive Officer of Redwood Asset Management. “The launch of these funds represents a necessary extension of distribution for Redwood’s unique strategies, and broadens access and choice for investors seeking truly active ETFs.”

The Redwood US Preferred Share ETF, managed by a Chicago-based Nuveen Asset Management, employs a fundamental, active approach that combines bottom-up credit research and top-down structural analysis to invest in US institutional preferred securities with attractive yields in the investment-grade universe.

The fund provides access to preferred shares across the $1,000-par institutional market, using a fundamental approach to identify high-quality securities and opportunistically capture structural inefficiencies caused by liquidity and technical factors. It offers both currency hedged relative to the Canadian dollar (Ticker: RPU) and non-currency hedged (Ticker: RPU.B) units. It has a management fee of 0.80%.

The Redwood Floating Rate Preferred ETF employs top-down macro analysis and bottom-up stock selection as well as active risk mitigation to invest in Canadian preferred shares issued predominantly by investment-grade issuers. The fund owns a high-quality portfolio of Canadian preferred shares that provides an attractive source of tax-efficient dividends. The management fee is 0.75%.

The firm has also announced plans to shortly list an additional two actively-managed ETFs – the Redwood Emerging Markets Dividend ETF (REM), and the Redwood Unconstrained Bond ETF (RUB).

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