Guggenheim plans to offer an actively managed short-dated bond exchange traded fund (ETF) that will invest mainly in below-investment-grade bonds, otherwise known as junk.

Although the fund will invest primarily in junk bonds, it will switch to investment-grade paper when the opportunity arises. The timing of the fund could be good for a couple reasons:

  • Concerns about the U.S. deficit may lead to inflation that would hit long-term debt; short-term debt isn’t as impacted when interest rates increase. [Finding Treasure in Junk Bond ETFs.]
  • Corporations are in a decent position these days. Default rates are declining and they’re sitting on a near-record $2 trillion in cash.

The company said the Guggenheim Enhanced Short Duration High Yield Bond ETF will invest in debt with a near-term maturity and/or an effective duration of one year or less, reports Olivier Ludwig for Index Universe. The fund will try to gain a total return through monthly income and capital appreciation consistent with capital preservation. [Are Junk Bond ETFs for You?]

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.