In what could be the first step in creating increased competition in a still relatively small Active ETF space, Grail Advisors launched two new actively-managed ETFs – the Grail McDonnell Intermediate Municipal Bond ETF (GMMB) and the Grail McDonnell Core Taxable Bond ETF (GMTB), on January 29, 2010 on the NYSE. Grails’ Intermediate Municipal Bond ETF GMMB, will compete directly with PIMCO’s Intermediate Municipal Bond Fund MUNI which was the second of two Active ETFs launched by PIMCO.
Archive for January, 2010
GMTB is an actively-managed bond ETF that invests at least 80% of its assets in investment grade debt securities issued by the US government, its agencies, municipalities, other mortgage and asset-backed securities as well as corporate and bank obligations. The fund tries to achieve a high level of current income and risk-adjusted returns above its benchmark – the Barclays Aggregate Bond Index. The GMTB portfolio is expected to have an average duration of 3-6 years.
GMMB is an Active ETF that invests at least 80% of its assets (under normal conditions) in municipal debt securities that provide income exempt from federal taxes. The fund aims to invest in a broad range of maturities with issuer and geographical diversification, in order to achieve a high level of tax-free current income and greater risk-adjusted returns than its benchmark – the Barclays 3-15 Year Municipal Bond Index.
How does one identify the coming of a trend? You witness the first movers who more often than not have to battle challenges and criticism and may crumble, but if their idea had merit, other people will try it and they will learn from the first mover’s mistakes, figuring out new ways to “package” the idea. And very soon, people will be lining up to take a piece of the new pie and scrambling to get to market with their own versions. That’s when you know the trend has arrived.
DENT is an actively managed fund of funds (more accurately, an ETF of ETFs) and invests primarily in other ETFs on the market. With a goal of long-term capital growth, DENT tries to identify “through proprietary economic and demographic analysis, the overall trend of the U.S. and global economies and how consumer spending patterns may change”. The portfolio managers use that analysis to invest in ETFs across different asset classes, including domestic and foreign equities, fixed income and commodities.
In essence, Active ETFs are a new breed of exchange-traded funds that combine the benefits of ETFs with the benefits of active management. The benefits of ETFs are well-known and widely accepted, which is what has lead the ETF industry to surpass the $1 trillion mark recently, in terms of assets being managed.
