Loomis, Sayles & Company, a US-based affiliate of French asset manager Natixis Investment Managers, has launched the Natixis Loomis Sayles Short Duration Income ETF (LSST US), providing actively managed short-duration bond exposure.
Loomis Sayles lists actively managed short-duration bond ETF
The ETF seeks to outperform the Bloomberg Barclays US Government/Credit 1-3 Year Index with benchmark-like volatility and a low tracking error. The managers will however seek to earn some alpha through relative positioning in credit and securitized sectors.
The portfolio may hold bonds rated below investment grade or US dollar-denominated emerging market debt up to a maximum 15% of the total portfolio weight.
The investment process combines bottom-up security selection with top-down macroeconomic analysis.
“We feel that our experience in security selection give us an edge in the active ETF space. Sector and issue selections will be made using the full extent of our proprietary research resources,” said Jae Park, chief investment officer at Loomis Sayles. “LSST gives investors access to a fixed income strategy that draws on Loomis Sayles’ experience in active credit selection and deep research resources in a low-cost, liquid vehicle.”
The nature of the strategy helps to limit interest rate risk which will likely be attractive to investors during a rising rate environment.
According to Loomis Sayles, the fund may be used as a portfolio building block in a diversified portfolio or as an alternative to money market funds and ultra-short duration bond funds.
“Our clients have diverse investment needs and we are happy to offer them access to our affiliates’ expertise via various vehicles,” said David Giunta, CEO for the US and Canada at Natixis Investment Managers. “Utilizing the expertise of Loomis Sayles, we can offer an actively managed short-duration fixed income ETF that may help investors construct a more resilient portfolio for 2018 and beyond.”
LSST is listed on NYSE Arca and has a total expense ratio (TER) of 0.38% due to a contractual fee waiver in place until at least May 2019. Its gross expense ratio is significantly higher at 0.87%.
Some of the largest and most well-known actively managed ETFs currently existing in this space are from bond specialists PIMCO. The PIMCO Enhanced Short Maturity Active ETF (MINT US) leads the way with over $8 billion in assets under management. It currently has 78% of its portfolio dedicated to bonds with less than one year remaining to maturity; the rest is in bonds with maturities between one and three years. MINT has a TER of 0.36%.
There is a European-listed version of MINT – the PIMCO US Dollar Short Maturity Source UCITS ETF (MINT LN) – which has $2.6bn in AUM and a slightly cheaper TER of 0.35%.