Amplify Teams Up With Samsung on New ETF

Amplify ETFs has teamed up with the asset-management unit of South Korea's Samsung Electronics to launch an ETF that tracks the SOFR, or Secured Overnight Financing Rate, as the benchmark lending rate hovers at record highs. 

The Amplify Samsung SOFR ETF (SOF) is an actively managed fixed-income fund that aims to offer a yield equal to the SOFR, the interest rate for cash borrowed overnight using Treasuries as collateral.  

The SOFR has been hovering at around 5.3% since early August, according to data from the St. Louis Federal Reserve. That's the highest rate on record.

As interest rates have broadly risen since early 2022, the SOFR has increased to 5.32% from 0.05%, about 100 times higher. Rising rates have hit longer-duration funds particularly hard. The worst-performing bond funds of the past year have been longer-duration exchange-traded funds, according to etf.com data.  

“The attributes of SOFR really point to an attractive income opportunity with a stable asset value profile, similar to a money-market fund,” said Bill Belden, president of Amplify ETFs, in an interview. 

SOF Based on Samsung Fund 

SOF is based on a similar fund rolled out in South Korea by Samsung Asset Management, which bought a 20% stake in Amplify in 2022.  

“That fund has gotten a lot of traction over there; it raised several billion in that product in short order,” Belden said. 

The Amplify fund gets its yield primarily by directly purchasing the overnight loans, which are called repurchase agreements, or repos. 

Because the loans are made overnight, the effective duration of the fund’s holdings is one day, far shorter than the duration of holdings in ultra-short-term bond ETFs. For example, the largest ultra-short ETF, the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), has a duration of just under a month according to etf.com data.  

Belden said the funds are just above money-market mutual funds and just below ultra-short-term bond funds in terms of risk and return. 

Contact Gabe Alpert at [email protected]