USAA launches six debut ETFs

Oct 26th, 2017 | By | Category: Alternatives / Multi-Asset

The United Services Automobile Association (USAA) has become the latest new ETF issuer with the launch of six ETFs on NYSE Arca. Four of the ETFs track smart beta equity indices while two are actively managed fixed income strategies.

USAA launches six debut ETFs

The launch marks USAA’s foray into the ETF provider space.

The ETFs arrive more than three years after the Texas-based Fortune 500 company first filed registration papers with the SEC.

The four equity funds track MSCI indices and provide access to equities with a blend of value and momentum factor exposure, within the US large- and mid-cap, US small-cap, international, and emerging markets universes.

Each underlying index ranks stocks in their selection universe based on a composite score made up of an equally weighted combination of the stock’s value and momentum factor score, relative to the stock’s sector classification. Indices then select the top 25% for inclusion.

The final constituents are then risk-weighted with those with the highest historical volatility being assigned the lowest weight.

The funds and their total expense ratios (TERs) listed below:

USAA MSCI USA Value Momentum Blend Index ETF (ULVM). TER – 0.20%
USAA MSCI USA Small Cap Value Momentum Blend Index ETF (USVM). TER – 0.25%
USAA MSCI International Value Momentum Blend Index ETF (UIVM). TER – 0.35%
USAA MSCI Emerging Markets Value Momentum Blend Index ETF (UEVM). TER – 0.45%

The two fixed-income ETFs are described as income-oriented core building blocks for investors’ portfolios. Each fund is managed in-house by USAA’s fixed income specialists and will typically hold dollar-denominated bonds, much like an aggregate bond portfolio, but may tilt toward credit to enhance returns.

The fund may invest in government obligations (including US, state, and local governments, their agencies and instrumentalities), mortgage- and asset-backed securities, corporate debt securities, repurchase agreements, and other securities believed to have debt-like characteristics. The fund also may allocate up to 25% of its assets to high-yield corporate bonds and up to 20% to mortgage-backed or asset-backed securities not sponsored by the US government or agencies.

The funds differ in the maturity segments they target, with one focusing on short-term bonds and the other on intermediate term.

Their names, along with their TERs, are outlined below:

USAA Core Short-Term Bond ETF (USTB). TER – 0.35%
USAA Core Intermediate-Term Bond ETF (UITB). TER – 0.40%

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