Natixis Launches Short-Duration Income ETF

Natixis has launched a new fund in late December, focused on providing exposure to the short duration money market space.

Natixis Short Duration Income ETF LSST seeks to track the yield and performance, before fees and expenses, of the Bloomberg Barclays (LON:BARC) US Government/Credit 1-3 Year Index. The index is designed to provide exposure to short-duration credit securities.

Fund Characteristics

The fund seeks to provide an active management approach to sector allocation and security selection by conducting both top-down and bottom-up analysis.

The fund has amassed $20 million in AUM within a few days of trading and charges a fee of 38 basis points a year.

How Does it Fit in a Portfolio?

This ETF is a good play for investors looking for some allocation to short-term investments in the fixed income space, as it offers higher yields than treasury investments with similar duration in exchange for being exposed to a certain degree of credit risk.

As a result, this ETF is a good way to diversify investors’ portfolio by giving exposure to low duration credit bonds.

Competition

The fund faces immense competition from other funds focused on providing exposure to the same space. Below we discuss a few ETFs that seek to provide exposure to this corner (see all Money Market/Ultra-Short Term ETFs here).

PIMCO Enhanced Short Maturity Strategy Fund (NS:MINT)

MINT is an actively managed ETF and does not track any particular index. It measures the performance of investment-grade bonds with short maturities. The fund primarily aims to generate greater income and total return potential than money market funds.

It has AUM of $8.1 billion and charges a fee of 36 basis points a year. Its top sector allocations are to Investment Grade Credit, Mortgage and U.S. government related securities, with 45.8%, 19.0% and 13.4% exposure, respectively (as of Dec 31, 2017). It has an effective duration of 0.54 years and an effective maturity of 0.53 years. The fund has returned 1.9% in a year.

Guggenheim Ultra Short Duration ETF (TO:GSY)

The fund seeks maximum current income, consistent with preservation of capital and daily liquidity. It uses a low duration strategy and uses an active management approach.

It has AUM of $1.1 billion and charges a fee of 27 basis points a year. From a sector look, Cash and Cash equivalents, Corporate Bonds and Asset backed securities are the top three allocations of the fund, with 48.0%, 27.0% and 15.0% exposure, respectively (as of Sep 30, 2017). It has an average duration of 0.09 years and an average maturity of 1.32 years. The fund has returned 1.9% in a year.

iShares Short Maturity Bond ETF NEAR

The fund seeks to maximize current income through diversified exposure to short-term bonds. It uses a low duration strategy and uses an active management approach.

It has AUM of $2.8 billion and charges a fee of 25 basis points a year. From a sector look, Asset backed securities, Financial Institutions and Industrial are the top three allocations of the fund, with 34.0%, 26.8% and 25.9% exposure, respectively (as of Jan 10, 2018). It has an effective duration of 0.46 years and an effective maturity of 1.63 years. The fund has returned 1.5% in a year.

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