Aware Asset Management, in partnership with Tidal ETF Services, is bringing its expertise in fixed income investing to the ETF space, launching its first ETF this week—one that focuses on ultra-short-term debt.
The Aware Ultra-Short Duration Enhanced Income ETF (AWTM), listed Tuesday on the NYSE Arca, is an actively managed ETF that owns investment-grade fixed- and floating-rate bonds as well as other debt securities. The portfolio is global in scope, but all debt securities are U.S.-dollar-denominated, according to the prospectus.
AWTM has overall effective duration of less than one year. (The shorter the duration, the less sensitive the portfolio is to interest rate changes.) The strategy, designed for current income, looks to deliver a yield that’s 0.75-1.00% above the yield of the most recently issued three-month U.S. Treasury bill.
“We developed this ETF as an alternative to earnings credits, commercial paper and money market funds,” said John Orner, president and CIO of Aware Asset Management.
“Generating high returns with low risk is our objective. To succeed, we focus on the risk,” Orner said in a release. “We see great opportunity for investors at the short end of the yield curve, especially since the current flat yield curve fails to offer incentive to increase durations.”
AWTM comes with an expense ratio of 0.23%, or $23 per $10,000 invested; a price tag that’s lower than the average ETF in this segment.
The fund will enter an area of the market where 16 other ETFs compete, with combined total assets of nearly $36 billion. At least five of these competing strategies have more than $1 billion in assets. These are big and popular strategies, such as the $21 billion iShares Short Treasury Bond ETF (SHV), and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL), with $8 billion.
Aware Asset Management, based in St. Paul, Minnesota, has $1.6 billion of assets under management.
Contact Cinthia Murphy at [email protected]