Daily ETF Watch: Equity, Debt ETFs Launch

January 15, 2014

Two ETFs are going live today, including one focused on managing interest-rate risks.

AdvisorShares today is launching a short-duration fixed-income ETF to invest in a broad range of fixed-income securities aimed at taking rising interest-rate risks off the table in an uncertain rate environment.

The Federal Reserve, which began tapering is quantitative easing policy, also promised at its policy meeting last month to keep short-term interest rates low until either the unemployment rate falls to 6.5 percent or until the inflation rate exceeds 2.5 percent a year.

Last month’s government jobs report, which showed that the unemployment rate declined from 7.0 to 6.7 percent in December, has added to investors’ fears of rising rates in 2014.

AdvisorShares is banking on its AdvisorShares Sage Core Reserves ETF (HOLD), which will invest in U.S.-dollar-denominated investment-grade debt securities, including mortgage- or asset-backed securities rated Baa- or higher with an average duration of one year or less, to allay some investors’ fear.

The fund charges 0.35 percent, or $35 for every $10,000 invested, and will be subadvised by Sage Advisory Services, an Austin, Texas-based asset manager.

 

Launches

 

The fund’s index includes companies that have been incorporated in the U.S. for at least 100 years, have been listed on a major U.S. securities exchange for at least 10 years, and have a market capitalization of at least $1 billion.

PowerShares charges 0.50 percent, or $50 for every $10,000 invested, for the fund.

 

 

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