ETSpreads Files To Offer Fixed-Income ETFs

By
Steve Dew and Olivier Ludwig
May 19, 2010
Share:

Exchange Traded Spreads Trust (ETSpreads), a San Francisco-based fund company that has a number of ETFs in the works related to credit default swaps, filed with the Securities and Exchange Commission to gain permission to offer a variety of fixed-income funds, with the first one planned to be based on TIPS.

ETSpreads said its TIPS ETF will focus on maturities ranging from five to 10 years. The fund will invest in Treasury Inflation Protected Securities, which are designed to protect investors from declining purchasing power by adjusting the principal upward based on increases in the U.S. Consumer Price Index.

The single best-selling bond ETF last year was the iShares Barclays TIPS Bond Fund (NYSEArca: TIP), its popularity driven by investor concerns that with official interest rates near zero for more than a year, inflation risks returning in a big way as the economy recovers from its worst downturn since the 1930s.

ETSpreads didn’t specify a name or a launch date for the new fund, which depends on SEC approval of its so-called exemptive relief filing. It did say, however, that its TIPS ETF will be based on the Markit iBoxx TIPS Inflation-Linked 5-10 Index and that it will use ALPS Distributors Inc. as its distributor.

Exemptive relief filings grant ETF firms exception to sections of the Investment Act of 1940, and are just the first step in the path to launching ETFs. It often takes at least six to 12 months from the date of the initial filing for a company’s first ETF to hit the market.

The funds the company has already filed with the SEC to launch under a separate exemptive relief filing include the ETSpreads High Yield CDS Tighten Fund, the ETSpreads High Yield CDS Widen Fund, the ETSpreads Investment Grade CDS Tighten Fund and the ETSpreads Investment Grade CDS Widen Fund.

ETF DAILY DATA

Investors plowed money into currency-hedged equity funds like ‘HEDJ’ and ‘DBEF’ on Wednesday, March 4, while yanking assets out of sundry bond funds, such as ‘HYG.’ Total U.S.-listed ETF assets dropped to $2.084 trillion as a market pullback offset net inflows.

Sizable outflows from various iShares bond funds paced that firm’s outflows on Wednesday, March 4. Total U.S.-listed ETF assets ended the day at $2.084 trillion.

ETF.COM ANALYST BLOGS

By Olivier Ludwig

At a time when ‘smart beta’ is taking off, it’s good for investors to have the right tools to decide what works.

By Olivier Ludwig

The world of ETFs is full of wonderful money-saving surprises.

By Howard Lee

An inside look at iShares’ new $75 million ‘smart beta’ bond ETF.

By Dave Nadig

With trillions of dollars of bonds yielding worse than nothing, should you be worried about your ETF?