Our weekly roundup of new fund launches.
Goldman unveils junk bond ETF
Goldman Sachs plans to launch an ETF that will invest in high-yield corporate debt, despite an ongoing exodus from junk bonds.
The ETF will track an index of dollar-denominated bonds sold by U.S. or Canadian companies, the firm’s SEC filing shows.
The fund will avoid the most indebted issuers and those that are likely struggle to repay their borrowings. Issuers that have the lowest debt service and leverage metrics within each of three broad industry groups will be excluded from the benchmark.
The bank currently has just one bond ETF — investing in U.S. Treasuries — alongside six stock funds.
“One hurdle they may face with this launch is timing,” said Eric Balchunas, an ETF analyst for Bloomberg Intelligence. “This is a huge factor for new products and investors have been fleeing high yield ETFs lately.”
A junk bond fund run by State Street lost $1.1 billion of assets last week, the most since December 2015, Bloomberg data show. BlackRock’s high-yield bond ETF also lost $1.4 billion in the week through March 10, the most in almost five months.
Hartford Funds adds 2 active ETFs
The latest offerings from Hartford Funds are two actively managed fixed income ETFs, the Hartford Quality Bond ETF (HQBD) and Hartford Corporate Bond ETF (HCOR).
The Hartford Quality Bond ETF will seek investment grade debt, including US Governments and mortgage-backed securities, the firm says. It will carry an expense ratio of 0.39%.
The Hartford Corporate Bond ETF strategy is to seek predominantly investment grade corporate bonds for total return, with income as a secondary objective. The fund has an expense ratio of 0.44%.
“In response to advisors’ call for a broad range of investment options, we’ve decided to further diversify our ETF lineup and enter the actively managed ETF space with two fixed income products,” stated Vernon Meyer, chief investment officer of Hartford Funds.
Saba Capital launches its first ETF
Saba has unveiled its first ETF, Saba Interest Rate Hedged CEF ETF (Bats: CEFS), focused on closed-end funds.
The actively managed ETF, with a 2.42% expense ratio, invests in closed-end funds trading at a discount to net asset value and hedging the ETF’s risk to rising interest rates, according to the firm.
"Many closed-end funds are trading at an attractive discount to their net asset value," said Boaz Weinstein, founder and chief investment officer at Saba. "In an environment where investors are searching for yield, we believe closed-end funds offer high income and a margin of safety due to the discount."
CEFS seeks to outperform index-based closed-end fund products by actively trading the portfolio, in an attempt to capture the discounts to net asset value, the firm said.
S&P introduces green bond index
S&P Dow Jones Indices has launched its S&P Green Bond Select Index, which tracks the most liquid and tradeable green bonds issued globally, according to the firm. The index has been licensed to VanEck a week after the manager announced its first U.S. green bond ETF.
The index measures the performance of green-labeled bonds, which finance environmentally-friendly projects.
Only green bonds that fulfill the eco-friendly requirements, set by the nonprofit organization Climate Bonds Initiative, are eligible for inclusion in the index.
"We continue to see strong demand for investment opportunities that incorporate environmental, social and corporate governance factors," said Reid Steadman, deputy head of product management at S& P Dow Jones Indices. "The S&P Green Bond Select Index is a benchmark for market participants seeking to monitor developments in this critical area of green finance."
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