IndexIQ added a new fixed income ETF on Tuesday, with MacKay Shields serving as a subadvisor. The IQ MacKay Multi-Sector Income ETF (MMSB) is the fifth actively managed bond fund for which IndexIQ has partnered with boutique fixed income manager MacKay Shields. IndexIQ and MacKay are both subsidiaries of New York Life Investments.
The new ETF comes with an expense ratio of 0.40% and lists on the NYSE Arca.
MMSB’s prospectus notes that it aims to “maximize current income and long-term capital appreciation,” and the fund has wide latitude to invest across different types of fixed income securities, geographies and credit quality.
The fund is managed by the heads of MacKay’s global fixed income team, Stephen Cianci and Neil Moriarty. They will incorporate input from MacKay’s core fixed income, U.S. high yield, taxable municipals and convertibles teams in managing the fund.
“Our investment philosophy focuses on diversified sources of alpha potential, where it is critical to not rely on only one or two levers to seek alpha, but rather have the ability to uncover value across sectors,” Cianci said.
“We believe fixed income valuations are meaningfully more attractive, and current yields have greatly improved the income profiles for investors,” he added. “While investors have endured unprecedented drawdowns from the bond markets in 2022, in our view this is a compelling entry point for long term investors as we see more opportunities through active management.”
The fund’s managers will combine macroeconomic analysis with a bottom-up approach to security selection. The investment approach will also include risk analysis, including consideration of environmental, social and governance-related risks, according to the prospectus.
The portfolio can hold up to 60% of its assets in below-investment-grade debt, and up to 20% of the portfolio can hold securities issued by entities in emerging markets. Meanwhile, the portfolio can also allocate 20% to securities that carry non-U.S. currency risk, the document says.
The IQ MacKay Municipal Insured ETF (MMIN) is the largest fund resulting from the IndexIQ-MacKay Shields partnership, with $330 million in assets under management. The MacKay-subadvised funds in the IndexIQ family have combined assets of nearly $830 million.
Contact Heather Bell at [email protected]