Daily ETF Watch: New Muni Bond ETF

The fund will focus on dampening rising interest-rate risks.

Market Vectors today is launching a short duration, high-yield municipal bond fund to take the risk of rising interest rates off the table for investors in a rising-rate environment at a time when the Federal Reserve has begun “tapering” its quantitative easing monetary stimulus program.

The Market Vectors Short High-Yield Municipal Index ETF (SHYD) will invest in a portfolio of municipal bonds that cover the U.S. dollar-denominated high-yield, short-term, tax-exempt bond market.

The fund’s index, the Barclays Municipal High Yield Short Duration Index, maintains a 75 percent weight in below-investment-grade muni bonds with the remaining percent weighted in Baa/BBB-rated investment-grade bonds.

The fund charges 0.35 percent, or $35 for every $10,000 invested, according to a filing.

Fed officials stressed in their last meeting that they are committed to keeping short-term interest rates “exceptionally low” until either the unemployment rate falls to 6.5 percent or the inflation rate exceeds 2.5 percent a year. However, a recent government jobs report indicated that the unemployment rate declined from 7.0 to 6.7 percent in December.

Launches

• AdvisorShares is set to debut its active short-duration fixed-income fund this week, dubbed the AdvisorShares Sage Core Reserves ETF (HOLD). It will launch on Wednesday, Jan. 15. The fund will invest in a broad range of fixed-income securities, 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. 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.
• PowerShares on Wednesday, Jan. 15 will debut its PowerShares NYSE Century Portfolio (NYSE Arca, Inc. – NYCC), which will invest in some of the oldest major public companies in the United States. 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.

Filings

• Pimco, the world’s biggest bond fund manager, has filed updated regulatory paperwork for two fixed-income ETFs to replicate the success of the $3.9 billion Pimco Total Return ETF (BOND | B-30).

The Pimco Diversified Income Exchange-Traded Fund (DI) will invest in a diversified portfolio of U.S. and non-U.S. public or private bonds of varying maturities from three to eight years. The fund will have an expense ratio of 0.85 percent, or $85 for every $10,000 invested.

Also, the Pimco Low-Duration Exchange Traded Fund (LDUR) will own primarily investment-grade debt with duration of one to three years. It will charge 0.55 percent, or $55 for every $10,000 invested.

• Deutsche Asset & Wealth Management has reduced the net expense ratio of the db X-trackers Harvest CSI 300 China A-Shares Fund (ASHR) from 1.08 percent to 0.82 percent, or $82 for every $10,000 invested.

Since the fund launched in November 2013 with an initial capital investment of $108 million, its assets under management have almost doubled to $210 million, and its average daily trading volume has reached approximately 350,000 shares per day, according to the firm.