Schwab Plans 3 Ultra-Short-Bond ETFs

By
August 05, 2013
Share:

The firm plans to add three ultra-short-duration fixed-income ETFs to its lineup.

Schwab filed paperwork proposing three short-term, target-duration bond funds, the latest sign that fund sponsors are looking to provide investors with more choices to effectively manage an environment of rising interest rates.

  • The Schwab TargetDuration 2-Month ETF
  • The Schwab TargetDuration 9-Month ETF
  • The Schwab TargetDuration 12-Month ETF

While the filing came just two days after the Fed’s decision to continue its monthly $85 billion bond-buying program, investors have begun in recent months to shift bond holdings to the short end of the yield curve to manage interest-rate risk before the Fed begins to normalize borrowing rates. The three Schwab funds fit the bill perfectly, allowing investors to eke out a bit of return without the heightened risk that bond investments further along the curve can subject them to.

All three funds will make use of similar investment and security-selection strategies, with the principal difference between the three being their respective target durations of two, nine and 12 months.

The securities within the funds’ portfolios will be investment-grade, dollar-denominated debt from U.S. as well as foreign issuers. The debts purchased by these funds will have a rating of or be equivalent to at least A- per Standard & Poor’s Financial Services.

None of the funds yet has a ticker or price, but the prospectus did say that the three funds would have their initial listings on the New York Stock Exchange’s electronic platform, Arca.

 

ETF.COM CHANNELS

Interested in China? Use our China ETFs Channel, library, and ETF screener.

Interested in oil? Use our oil ETFs channel, library and ETF screener!

ETF DAILY DATA

The real estate ETF topped the inflows list on Tuesday, May 3.

On Tuesday, May 3, SSgA saw the largest net outflows of all ETF issuers.

ETF.COM ANALYST BLOGS

By Dave Nadig

How NAV works differently between ETFs and mutual funds.

By Drew Voros

With the broad equity ideas all taken, issuers look for thinner slices of exposure.

By David Lichtblau

How funds wash away capital gains through create/redeem process.

By Dave Nadig

End investors are the big winners; brokers—not so much.

ETF INDUSTRY PERSPECTIVE

By Adam Patti

ETFs are more tax efficient than mutual funds.

By Sprott Asset Management

New fund’s underlying index targets equities sentiment on social media.

By Kristi Kuechler

Avoid taking unrewarded—or unintended—risks.