Federated Investors Readies First ETF

by: Tom Lydon

Investment manager Federated Investors has filed to launch a fixed-income exchange traded fund designed as an alternative to money market mutual funds. It would be the company’s first ETF.

The firm is readying the fund as investors seek shelter in fixed income due to the uncertainty in markets.

“The initial fund will offer a simple and efficient way to gain exposure to a basket of short and/or ultra-short-duration fixed-income securities while preserving the opportunity to outperform the relative benchmark index,” according to the filing as reported by Ignites.

The ETF would try to outperform the three-month Libor, a benchmark for short-term interest rates, by investing in fixed and floating rate income shares, reports Cinthia Murphy for Index Universe. Analysts are likening the Federated Active UltraShort Fixed Income ETF to the $1.3 billion Pimco Enhanced Short Maturity Strategy (NYSEARCA:MINT), which is an investor favorite at the moment.

The Federated ETF would be actively managed. Federated is best known for its lineup of money market funds.

Joe Morris of Ignites reports that Federated is marketing the fund as a portal to short-dated securities.

Tisha Guerrero contributed to this article.