Rising Rate Preparation With Short-Term Bond ETFs

In another sign of investors’ appetite for short duration bond funds, the iShares Short Maturity Bond ETF (NYSEArca: NEAR) is just 10 months old and already has $326.1 million in assets under management. NEAR, also rated overweight by S&P Capital IQ, has a 30-day SEC yield of 1.1% and an effective duration of 0.93 years.

NEAR’s yield, “we believe, is the result of holding mostly corporate bonds with lower-investment grade (A-rated or BBB-rated) bonds,” said S&P Capital IQ. [Short Duration ETF Showdown]

Investors seeking an actively managed to short-term bond investing can consider the PIMCO Enhanced Short Maturity ETF (NYSEArca: MINT). Home to $3.7 billion in AUM, MINT is the largest actively managed ETF.

MINT currently has 631 holdings and an effective duration of just 0.54 years. The 30-day SEC yield is 0.52%. Over half of MINT’s portfolio is allocated to short-term investment-grade corporate bonds with another 17% going to mortgage-backed securities.

Vanguard Short-Term Bond ETF

 

Tom Lydon’s clients own shares of TLT.