With interest rates at historic lows, AdvisorShares, an exchange traded fund sponsor known for its actively managed offerings, is launching a new active short-duration bond fund that tries to limit risk in changing rates.
The AdvisorShares Newfleet Multi-Sector Income ETF (MINC) began trading on Wednesday, March 20. The actively managed ETF will try to provide current income consistent with preservation of capital while mitigating fluctuations in net asset value due to interest rate changes. The fund has a 0.75% expense ratio.
MINC will primarily hold high quality investment grade debt. The fund will overweight and underweight 14 different bond sectors as the portfolio manager builds a diversified and tactical portfolio. Bond holdings will have a low average duration, targeted between 1 and 3 years.
Newfleet Asset Management, an affiliated manager of Virtus Investment Partners, will sub-advise the ETF.
"We feel investors and financial advisors in search of yield with an actively managed short duration bond ETF may find MINC as a desirable alternative to other short-term investment options," Noah Hamman , chief executive officer of AdvisorShares, said in a press release.
Other actively managed short-term bond ETFs with similar durations include the PIMCO Short Term Municipal Bond ETF (SMMU), which has a 1.97 year effective duration and a 0.39% 30-day SEC yield, and the FlexShares Ready Access Variable Income Fund (RAVI), which has a 0.78 year effective duration and a 0.41% 30-day SEC yield.
Max Chen contributed to this article.