Actively managed ETF innovator Grail Advisors has begun trading a pair new funds aimed at the fixed-income market. The new funds are subadvised by Chicago-based fixed-income specialist McDonnell Investment Management.
The new ETFs are:
- Grail McDonnell Intermediate Municipal Bond ETF (NYSEArca: GMMB)
- Grail McDonnell Core Taxable Bond ETF (NYSEArca: GMTB)
Both of the new Grail McDonnell bond offerings will combine all the benefits of ETFs – lower costs, tax efficiency, transparency of holdings, and intraday liquidity – with actively-managed strategies from a veteran fixed-income management team.
GMMB will invest at least 80% of its assets in debt securities that feature federal tax-exempt interest payments. McDonnell emphasizes sector and security selection, as well as yield curve positioning, says iStockAnalyst. The fund will invest chiefly in securities that are rated investment-grade, but it also may invest up to 20% of its assets in high-yield issues.
GMTB will also primarily invest in investment-grade securities. This includes securities issued by the U.S. government, municipal bonds and mortgage-backed securities. The average duration of the portfolio is expected to be in the range of three to six years, says ETF Daily News.
Expense ratios top out at 0.35% annually, although there may be an active management charge.
Grail CEO William M. Thomas said that the provider is now in discussions with a number of financial institutions and asset managers to launch customized, actively managed ETFs that feature complete daily disclosure on all components.