Feb. 23, 2015, 3:25 PM
- In what could be a preview of things to come in the money market industry, Fidelity last week converted three of its so-called prime funds into government funds which will invest only in Treasurys. The industry's largest fund, the $112B Fidelity Cash Reserves (MUTF:FDRXX) will be among those affected.
- The move was prompted by new D.C. regulations set to take effect next year whose purpose - says the government - is to cut the potential for runs on money-market funds in some future financial crisis. Certain funds for institutional investors will have to forego a $1 share price for one that floats in value, and retail funds would be allowed to impose redemption fees and/or "gates" on withdrawals for up to ten days.
- Such rules, naturally, would not apply to funds owning paper issued by the Uncle Sam, hence Fidelity's switch (with others sure to follow). For investors, it means lower yields. For the government? Moody's Ram Sri-Saravanapavaan figures an additional $100B-$200B could be converted from prime funds to government.
- ETFs of interest: MINT, NEAR, RAVI, ULST, FTSD, FTSM, HOLD, GMTB, ICSH
Aug. 6, 2014, 10:40 AM
- The First Trust Enhanced Short Maturity ETF (NASDAQ:FTSM) is an actively managed fund which invests in short-duration, investment-grade securities with the objective of delivering current income while providing capital preservation.
- "Over the past few years, in this low interest rate environment, investors in short-term bonds have often been faced with a choice between losing purchasing power safely in high quality bonds with negative real returns, or seeking higher returns from securities that are below investment-grade," said Ryan Issakainen, Senior Vices President and ETF Strategist at First Trust, in a statement.
- The active strategy of the ETF could provide a middle ground for investors looking for short-term securities that could potential offer a high return, but still preserve capital and avoid daily liquidity concerns.
- Other short-term investment grade ETFs: VCSH, CSJ, SCPB, SLQD, RAVI, MINC
Nov. 11, 2013, 5:34 PM
- Mutual fund giant Franklin Templeton Investments (BEN) recently launched their first ETF, the Franklin Short Duration U.S. Government ETF (FTSD) with an expense ratio of 0.30%.
- This actively managed fund focuses on short term securities issued or guaranteed by the U.S., but also invests across other short term debt sectors; including government and government agency debt, Treasury Inflation-Protected Securities, Adjustable Rate Mortgages and Mortgage-Backed Securities.
- Money Market ETFs: MINT, NEAR, RAVI, ULST, GMTB
Jul. 8, 2013, 12:16 PM
One of the better-selling ETFs in June was the Pimco Short Maturity ETF (MINT), which gathered $700M. The fund was already a popular one as its 0.98% yield beat out money-market funds, and now it's attracting those fearful of higher rates. Money market funds' advantage of a fixed NAV may soon disappear as well, thanks to a SEC proposal to force institutional funds to float. Similar ETFs: BIL, SHV, GSY, PVI, VRD, RAVI.| Jul. 8, 2013, 12:16 PM | 4 Comments
May 16, 2013, 1:28 PMFund managers like BlackRock (BLK) and Legg Mason (LM) get ahead of what could be a "seismic reallocation of assets" by launching "ultra-short" funds with floating NAVs ahead of new money market regulations. These funds are different than the "ultra-short" funds which ran into trouble in 2008 in that their maturities are even shorter and they can only invest in high-grade debt. Somewhat similar ETF offerings: SHV, MINT, BIL, PVI, GSY, VRD, RAVI. | May 16, 2013, 1:28 PM | 1 Comment
Mar. 13, 2013, 10:12 AM
Trying to turn back coming regulation, Fidelity throws its support behind "liquidity gates" and fees on money-market funds during times of market stress. The proposed model would temporarily halt redemptions should liquid assets fall below a certain level. Should liquidity continue to decline, a 1% redemption fee would be imposed. Short-duration ETFs (SHV, MINT to name two) are sounding better and better.| Mar. 13, 2013, 10:12 AM
Feb. 12, 2013, 2:45 PM
The presidents of all 12 Fed regional banks pen a letter backing a regulatory push for money-market reform. "Money market funds have no capacity to absorb losses in the event of a decrease in the value of (held) assets." MINT, BIL, SHV, and GSY see a few more dollar inflows.| Feb. 12, 2013, 2:45 PM | 2 Comments
Jan. 31, 2013, 2:14 PMWisdomTree's (WETF) latest (pdf) is the actively managed Global Corporate Bond ETF (GLCB). Unique in that it can invest in any corporate bond listed anywhere in the globally, GLCB charges 0.45%. Competing ETFs: Passive IBND (ER 0.55%) has significantly less emerging market and high yield exposure but has a similar intermediate duration. Active FWDB (ER 1.26%) is more similar geographically and credit grade-wise but mixes in non-corporate fixed income. RAVI (ER 0.25%) and MINT (ER 0.35%) are both actively managed but have much shorter durations and minimal high yield exposure. RAVI has no emerging exposure. | Jan. 31, 2013, 2:14 PM
Jan. 10, 2013, 9:40 AM