New products and changes introduced over the last week include an investment-grade bond ETF from ProShares with a built-in interest rate hedge and several other exchange-traded funds, along with Mercer’s Advisor Portal.
Here are details on the latest product developments of interest to advisors:
1) ProShares Launches First Investment-Grade Bond ETF with Hedge
ProShares announced the launch of ProShares Investment Grade-Interest Rate Hedged (IGHG), the first investment grade bond ETF in the U.S. that provides a built-in hedge against rising interest rates, it says.
IGHG targets a duration (a measure of interest rate sensitivity) of zero by shorting Treasury futures. It tracks the Citi Corporate Investment Grade (Treasury Rate-Hedged) Index, which is a U.S. dollar-denominated index that measures the performance of investment grade corporate debt.
The index consists of a long position in investment grade corporate bonds and a duration-matched short position in U.S. Treasury bonds. The investment grade portion of the index offers exposure to the more liquid, cash-pay bonds.
2) Franklin Templeton Launches Short-Duration U.S. Government ETF
Franklin Templeton Investments announced the introduction of Franklin Short Duration U.S. Government ETF (FTSD), which is an actively managed ETF that seeks a high level of current income and preservation of capital by following a short-duration U.S. government portfolio strategy. It tracks the Barclays U.S. Government 1-3 Year Index, but can also take advantage of opportunities outside the index.
FTSD is managed by Roger Bayston and Patrick Klein. Under normal market conditions, it will invest at least 80% of its net assets in securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, including government-sponsored entities.
It generally will invest a substantial portion of its assets in mortgage-backed securities including ARMS, but will also invest in direct obligations of the U.S. government (such as Treasury bonds, bills and notes). It may also invest in U.S. inflation-indexed securities issued by the government.
4) Global X Funds Launches Next Emerging & Frontier ETF
Global X Funds announced the launch of its Global X Next Emerging & Frontier ETF (EMFM), which tracks the Solactive Next Emerging & Frontier Index and has exposure to economies such as the Philippines, Nigeria, Chile, Panama, Pakistan and the Czech Republic.