Sit launches short-term aggregate fixed income ETF

Oct 8th, 2019 | By | Category: Fixed Income

Sit Investment Associates has partnered with white-label platform ETF Managers Group to launch an actively managed ETF that targets high-quality, short-term domestic and foreign debt securities.

Bank vault cash ETFs

VALT aims to provide a secure cash allocation vehicle with an emphasis on daily liquidity (Photo ©Jonathunder)

The ETFMG Sit Ultra Short ETF (VALT US) aims to provide a secure cash allocation vehicle that seeks to maximize current income while preserving capital and maintaining liquidity.

The fund has listed on NYSE Arca and comes with an expense ratio of 0.30%. It is benchmarked against the Bloomberg Barclays US Treasury Bills 1-3-month Index.

The ETF may hold a range of fixed income instruments from issuers globally including Treasury securities, agency securities, mortgage- and asset-backed securities, fixed and floating rate bonds from banks and corporations, commercial paper, and repurchase agreements. The fund may also invest in ETFs targeting the above segments.

Securities must be rated investment grade and have a remaining time to maturity of at least four years to be eligible for selection, while the fund will aim to maintain a dollar-weighted average duration between two months and one year.

The ETF takes a top-down approach, considering yield curve positioning, sector allocation, and security selection when constructing the portfolio.

Several issuers have launched short-term fixed income ETFs in the US thus far this year, including Goldman Sachs, Principal Financial, and IndexIQ.

This is the second fund born out of the partnership between Sit and ETFMG following the launch of the ETFMG Sit Rising Rate ETF (RISE US) in February 2015.

This fund is also actively managed and aims to profit from rising interest rates. It does this by tracking a portfolio of futures contracts and options based on two, five, and ten-year US Treasury securities, weighted to target a negative ten-year portfolio duration. It comes with an expense ratio of 0.75%.

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