ETF Spotlight on the ProShares USD Covered Bond ETF (NYSEArca: COBO), part of an ongoing series.
Assets: $6.6 million
Objective: The ProShares USD Covered Bond tries to reflect the performance of the BNP Paribas Diversified USD Covered Bond Index, which is comprised of the highest rated U.S. covered bonds
Holdings: CIBC (2.75%) 5.6%, UBS Ag London Brh Covered Bond (2.25%) 5.4%, Commonwealth Bk Australia (2.25%) 5.2%, Barclays Bk Plc (2.25%) 5.1% and Toronto Dominion Bank (1.625%) 5.0%.
What You Should Know:
- ProShares sponsors the fund.
- COBO has a 0.35% expense ratio.
- The ETF has 25 bond components, and the top 10 holdings make up 49.6% of the overall portfolio.
- Country allocations: Canada 37.7%, Australia 16.8%, Switzerland 10.4%, Norway 8.7%, Sweden 7.4%, France 7.1%, U.K. 5.2%, Netherlands 3.6% and Germany 3.1%.
- The fund has a modified duration of 2.95 years.
- COBO comes with a 0.71% 30-day SEC yield.
- The ETF is down 0.3% over the past month, up 1.4% over the last three months and down 0.8% year-to-date
- Covered bonds are a type of debt instrument issued by financial institutions that are secured by a segregated pool of financial assets, such as mortgages or public-sector loans.
- The covered bond holder has a senior, unsecured claim against the issuer, which is secured by the cover pool in the even of a default.
- This type of bond security is attractive for investors seeking high-quality, triple-A investments with decent yield.
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