Ultrashort Repo ETF Debuts

On Thursday, ClearShares rolled out it second actively managed ETF. The ClearShares Ultra-Short Maturity ETF (OPER) that invests mainly in repurchase agreements backed by U.S. government securities.

OPER comes with an expense ratio of 0.30% and lists on the NYSE Arca.

Repurchase agreements, or repos, are generally considered to be loans that are collateralized by securities. Basically, the fund will purchase a security that is issued by the U.S. government from a seller, who in turn agrees to repurchase it for a set price most often on the following business day. Both the effective duration and the dollar-weighted average maturity of the fund will be limited to one year or less, the prospectus says.

In addition to repos, OPER can also invest directly in securities issued by the U.S. government, including Treasury and agency debt such as mortgage-backed securities, according to the document, which also specifically points out that the ETF is not a money market fund.

Investopedia notes that repos can be used to raise short-term capital and government banks can use them to control the supply of money.

Last year, ClearShares rolled out its first ETF, the actively managed ClearShares OCIO ETF (OCIO). The multi-asset-class fund has gathered $113 million in assets under management since then.

Contact Heather Bell at [email protected]