Mon, Feb. 23, 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
Tue, Feb. 10, 12:49 PM
- The new fund is now accepting investments during a subscription period ending Fed. 23. This isn't a money-market substitute, warns Vanguard. Instead, says Vanguard CIO Tim Buckley, it's for those who "seek more income than a money market fund, but recognize the risks and are willing to accept the modest price volatility that will accompany the fund."
- The fund will launch with two share classes: The "investor" class will have an expense ratio of 0.2% and a minimum initial investment of $3K. The "admiral" class will have an expense ratio of 0.12% and a minimum investment of $50K.
- Among actively-managed short-term bond ETFs are Pimco's (NYSEARCA:MINT) which charges 0.35% and First Trust's (NASDAQ:FTSM) with a fee lower than MINT for now.
Nov. 11, 2014, 1:04 PM
- The First Trust Enhanced Short Maturity ETF (NASDAQ:FTSM) garnered $1B in inflows in just one day last week, and has AUM of $1.7B only three months after launch. The only other actively-managed ETF to draw that kind of number that quickly was Pimco's Total Return ETF.
- “It’s mind-boggling how quickly this fund has gained assets,” says ETF.com's Dave Nadig. “This is the ETF equivalent of money markets. This is where people are parking cash.”
- The fund aims to hold mostly investment-grade debt with maturity of less than three years. The strategy is similar to Pimco's Enhanced Short Maturity ETF (NYSEARCA:MINT), but the First Trust offering, says Nadig, is more inclined to invest in riskier paper. To wit, about 5% of FTSM's assets are invested in First Trust's Senior Loan ETF (NASDAQ:FTSL).
Jun. 11, 2014, 3:42 PM
- "Low policy rates, competition among banks for retail business, and tighter regulations have created an unusual environment where the highest-yielding bank CDs dominate virtually all short-maturity bonds and offer vastly superior risk-adjusted yields to most intermediate-maturity bonds," writes Morningstar's Samuel Lee, noting one 5-year CD offering a yield of 2.25% with a duration of just 1.7 years.
- To get a better yield in Treasurys, one would have to move all the way out to 7-year paper, and for investment-grade corporates would require something in the 4-5 year range.
- Against options like BIL, MINC, BSV, MINT, and NEAR, Lee would rather have CDs.
Jan. 7, 2014, 10:01 AM
- Bill Gross' Total Return Fund is making headlines for its weak 2013 performance and massive outflows - $41B, or 17% of AUM - but the ETF equivalent BOND had net outflows last year of just $165M, or 4.7% of AUM.
- The action speaks to the growing phenomenon of ETFs taking market share from mutual funds. In spite of a tough environment for fixed income, Pimco's bond ETF family managed more than $4.3B of net inflows last year.
- Countering BOND's modest losses was Pimco's Enhanced Short Maturity Strategy (MINT) - also actively managed, but investing in ultra-short-term paper. It had net inflows of $1.71B in 2013.
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.
- "This actively managed ETF can take advantage of opportunities outside of the index (Barclays U.S. Government 1-3 Year Index), which has a much narrower opportunity set," said Roger Bayston, the fund's lead portfolio manager, in a press release.
- Money Market ETFs: MINT, NEAR, RAVI, ULST, GMTB
Oct. 10, 2013, 2:00 PM
- The SSgA Ultra Short Term Bond ETF (ULST) started trading this morning - according the the prospectus this ETF seeks to provide current income consistent with preservation of capital and daily liquidity through investments in short duration, high quality bonds across the market.
- With an expense ratio of .20%, ULST is in the middle of the ultra short market expense scale with investor favorite, MINT, costing .35% while the also popular BIL charges just .13%.
Sep. 24, 2013, 3:45 PM
- The iShares Short Maturity Bond ETF (NEAR) is expected to be launched this week. Actively-managed, the fund will invest in dollar-denominated short-duration (maturity of about 1 year) debt. The concentration will be on government and high-quality corporate paper - 80% of assets must be in investment-grade debt at all times.
- Pimco's MINT invests only in investment-grade credits and about 60% of its fund is in government debt.
- NEAR will have an expense ratio of 0.25% vs. MINT's at 0.35%.
Sep. 9, 2013, 9:05 AM
- Pimco's Enahanced Maturity Strategy Fund (MINT) has replaced another Pimco fund, Bill Gross' Total Return ETF (BOND) as the largest actively-managed ETF.
- Money has been exiting Gross' Total Return Fund and its ETF version (BOND) amid the rout in long-dated fixed income prices. MINT - now with $4.15B in AUM vs. $4.03B for BOND - is a money-market equivalent, while BOND owns paper with 3-10 year duration.
- Opened in March 2012, BOND has been about the most successful ETF launch ever - second only to the SPDR Gold Shares Fund (GLD).
Jul. 8, 2013, 12:16 PMOne 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. | 4 Comments
Jul. 1, 2013, 12:14 PMThe exodus of money in June from emerging markets and (most) fixed income ETFs has been well documented, but did any funds garner new money? As a percentage of assets, 2 stand out - the iShares MSCI Germany ETF (EWG) and a leveraged-long Russell 2000 ETF (UWM). Also making the list of inflows are a number of short-term fixed income funds - SHY, SCPB, MINT - as investors shed duration risk. | Comment!
Jun. 5, 2013, 12:50 PMThe SEC unveils major money-market reform plans aimed at reducing the risk of runs. As expected, the main plank requires prime funds - where institutional investors play - to discard their fixed $1/share value in favor of a floating NAV. Retail and government funds - not considered at risk for runs - will not be forced to do so. The proposals are expected to drive interest in so-called short-duration ETFs which already have floating NAVs, MINT, BIL, SHV, and GSY among them. | 1 Comment
May 23, 2013, 10:12 AMThe ProShares High Yield-Interest Rate Hedged ETF (HYHG) starts trading today joining the likes of HYLS and THHY. The fund will short Treasurys to offset its exposure to high-yield corporate debt and comes with an expense ratio of 0.50% - significantly lower than THHY (1.45%) and HYLS (1.19%). | Comment!
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. | 1 Comment
Mar. 22, 2013, 10:25 AMThe recently announced Market Vectors Treasury-Hedged High Yield Bond ETF THHY starts trading today. The fund invests in high-yield bonds, but hedges interest rate risk by shorting Treasurys. It comes with a high expense ratio of 1.45% as compared to similar funds HYLS (1.19%), GYLD and MINC (0.75%). | Comment!
Mar. 19, 2013, 3:59 PMThe AdvisorShares NewFleet Multi-Sector Income ETF (MINC) is set to launch Wednesday. The fund will aim for a duration of 1-3 years and own mostly investment-grade debt, but can also invest in government, emerging market, and high-yield paper. The total annual cost will be 0.75%, more than double that of likely competitor - Pimco's $2.8B MINT. | Comment!
MINT vs. ETF Alternatives
The PIMCO Enhanced Short Maturity Strategy Fund (MINT) is an actively managed exchange-traded fund (ETF) that seeks greater income and total return potential than money market funds, and may be appropriate for non-immediate cash allocations. MINT will primarily invest in short duration investment grade debt securities. The average portfolio duration of MINT will vary based on PIMCO’s economic forecasts and active investment process decisions, and will not normally exceed one year. MINT will disclose all portfolio holdings on a daily basis, and will not use options, futures, or swaps.
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