By Matthew Hougan
On Tuesday, WisdomTree (WSDT.PK) launched the WisdomTree U.S. Current Income Fund (USY), an actively managed money market exchange-traded fund. USY is the first actual money market ETF to hit the U.S. market - Canada and Europe already have such funds trading.
The closest thing in the U.S. is the Bear Stearns Current Yield Fund (NYSEARCA:YYY). Also actively managed, YYY is nearly a money market fund, investing in securities with very short durations. However, it has the discretion to extend its duration out to 180 days, which is beyond the technical definition of a money market product.
"We have seen a flight to quality demonstrated by continued inflows into money market funds, and we believe investors seeking to manage their cash positions will welcome the daily flexibility and transparency of the ETF structure as an important and appropriate development," WisdomTree President and COO Bruce Lavine said.
Certainly with the markets still in quite a bit of turmoil, maintaining cash holdings probably seems highly desirable to many investors. And for investors who want the ability to move in and out of the market quickly on a daily basis in order to take advantage of investment opportunities, a money market ETF may be just the thing.
The fund is currently allocated 43.49% to government bonds and 56.51% to commercial paper, with 20 different holdings-and the government bond holdings are all in one security. USY has an average yield to maturity of 2.23%.
The fund charges an expense ratio of 0.25% and is managed by sub-advisor Mellon Capital.