State Street Global Advisors, the second-largest ETF provider in the U.S. by assets under management, filed paperwork with U.S. regulators to market three actively managed ultra-short bond funds that would join the widely successful money-market-fund proxy Pimco Enhanced Short Maturity Strategy ETF (NYSEArca: MINT).
SSgA’s planned ETFs would invest in short-duration high-quality debt consisting primarily of investment-grade fixed and floating rate securities that include corporate and government debt of varying maturities, the company said in the filing. Their goal is to serve up current income as well as preservation of capital.
Ultra-short bond funds are a good proxy for money market funds, although they can be riskier even if they still have minimal sensitivity to interest-rate changes. They also often deliver higher yields than money market funds, something that makes them attractive in the current environment of near-zero interest rates.
SSgA is the latest to target risk-averse investors’ appetite for income-generating strategies. Other fund providers like iShares and AdvisorShares also have MINT-like ETFs in the regulatory pipeline. MINT, which has an effective duration of one year, has gathered more than $1.8 billion in 3 ½ years.
SSgA’s planned funds include the following:
- The SPDR SSgA Ultra Short Term Bond ETF will have an effective duration between three and nine months.
- The SPDR SSgA Conservative Ultra Short Term Bond ETF’s effective duration of the portfolio is pegged at four months or less.
- The SPDR SSgA Aggressive Ultra Short Term Bond ETF will have an effective duration of six to 12 months.
The weighted average maturity—the U.S. dollar-weighted average of the remaining term to maturity—is pegged at six to 18 months for all the ultra-short and conservative funds, while the aggressive strategy has an average of 1 ½ and 2 ½ years.
No tickers or fees were disclosed in the filing.