Actively managed exchange traded fund (ETF) innovator Grail Advisors has begun trading a pair new funds aimed at the fixed-income market. The new funds are subadvised by Chicago-based fixed-income specialist McDonnell Investment Management.

The new ETFs are:

  • Grail McDonnell Intermediate Municipal Bond ETF (NYSEArca: GMMB)
  • Grail McDonnell Core Taxable Bond ETF (NYSEArca: GMTB)

Both of the new Grail McDonnell bond offerings will combine all the benefits of ETFs – lower costs, tax efficiency, transparency of holdings, and intraday liquidity – with actively-managed strategies from a veteran fixed-income management team. [Other bond ETFs that recently launched from Grail.]

GMMB will invest at least 80% of its assets in debt securities that feature federal tax-exempt interest payments. McDonnell emphasizes sector and security selection, as well as yield curve positioning, says iStockAnalyst. The fund will invest chiefly in securities that are rated investment-grade, but it also may invest up to 20% of its assets in high-yield issues.

GMTB will also primarily invest in investment-grade securities. This includes securities issued by the U.S. government, municipal bonds and mortgage-backed securities. The average duration of the portfolio is expected to be in the range of three to six years, says ETF Daily News.

Expense ratios top out at 0.35% annually, although there may be an active management charge. [Grail’s entrance into active management.]

Grail CEO William M. Thomas said that the provider is now in discussions with a number of financial institutions and asset managers to launch customized, actively managed ETFs that feature complete daily disclosure on all components.

For more stories about new ETFs, visit our new ETFs category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.