AdvisorShares’ Newfleet Multi-Sector Income ETF to take on Pimco’s MINT

Mar 19th, 2013 | By | Category: Fixed Income

AdvisorShares, a US-based sponsor of actively managed exchange-traded funds (ETFs), has teamed up with San Francisco-based Newfleet Asset Management, an affiliate of Virtus Investment Partners, to launch the AdvisorShares Newfleet Multi-Sector Income ETF (MINC).

AdvisorShares' Newfleet Multi-Sector Income ETF to take on Pimco’s MINT

Noah Hamman, chief executive officer of AdvisorShares.

The fund’s objective is to provide current income consistent with preservation of capital, while limiting fluctuations in net asset value (NAV) due to changes in interest rates.

To achieve this, Newfleet’s portfolio management team follows an active three-step process that focuses on sector analysis and allocation, security selection and portfolio construction to build a diversified portfolio that tactical overweights and underweights 14 different bond sectors.

The fund will principally invest in investment-grade securities, though will enhance diversification by allocating investments among various sectors of the fixed income market, including corporate investment-grade, corporate high-yield, bank loans, mortgage- and asset-backed securities, non-US dollar securities, emerging market high-yield securities and municipal bonds.

The average duration of the fund’s fixed income investments will range from one to three years and the fund may invest up to 20% of its total assets in securities that are rated below investment grade at the time of purchase. Generally, the fund will limit its investments in corporate high-yield securities to 10% of its assets and will limit its investments in non-US issuers to 30% of its assets.

Noah Hamman, chief executive officer of AdvisorShares, said: “The track record of Virtus and Newfleet in their actively managed mutual fund family is well established. In bringing MINC to market, we feel shareholders can benefit from their fixed income experience now accessible with the intraday liquidity and operational efficiency of an actively managed ETF.  Additionally, we feel investors and financial advisors in search of yield with an actively managed short-duration bond ETF may find MINC as a desirable alternative to other short-term investment options.”

David L. Albrycht, president and chief investment officer of Newfleet, added: “We believe our value-driven portfolio management approach, which focuses beyond the typical core bond sectors, can allow MINC shareholders to realise their investment goals.  We look forward to providing our expertise in fixed income investment management to an actively managed ETF.”

The fund’s strategy broadly resembles that of the hugely successful Pimco Enhanced Short Maturity Strategy ETF (MINT), which has accumulated assets of almost $2.8 billion since launching on the NYSE Arca in November 2009.

The new AdvisorShares fund is not the first to try and replicate Pimco’s success in the short maturity, cash alternative space. In September last year FlexShares, the ETF platform of Northern Trust, launched the FlexShares Ready Access Variable Income ETF (RAVI), while a number of other similar strategies are pending approval from the SEC, including the Schwab Active Short Duration Income ETF, the Legg Mason Western Asset Ultra-Short Duration ETF, and the iShares Ultra-Short Duration Bond ETF.

The new AdvisorShares fund has been listed on the NYSE Arca and comes with an annual net expense ratio of 0.75%.

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