First Trust, the sixth-largest U.S. issuer of exchange traded funds, said it has approved an additional fee waiver for the recently launched First Trust Enhanced Short Maturity ETF (NasdaqGM: FTSM) and that the new ETF will be reverse split.
Illinois-based First Trust approved an additional waiver of FTSM’s “management fees in the amount of 0.10% of the Fund’s average daily net assets for a period of one year beginning October 29, 2014,” according to a statement from the issuer.
“With the additional fee waiver, the Fund’s total annual fund operating expenses after fee waivers and offsets will be 0.25% of the Fund’s average daily net assets. The Fund’s annual unitary management fee is 0.45% of the Fund’s average daily net assets. First Trust previously agreed to waive management fees in the amount of 0.10% of the Fund’s average daily net assets until August 6, 2015 and to reduce management fees by the proportional amount of the Fund’s acquired fund fees and expenses for the Fund’s investment in other investment companies managed by First Trust.”
FTSM, which debuted in mid-August will also be reverse split on a one-for-two basis. That reverse split will be effective on or about Nov. 10.
In just under three months of trading, FTSM has quickly become one of the most successful new ETFs to debut this year, amassing nearly $506 million in assets under management. Among new ETFs, that total is surpassed only by the First Trust Dorsey Wright Focus 5 ETF (NasdaqGM: FV), which debuted in early March. [Another Good Year for New ETFs]
The actively managed FTSM invests in short-duration, investment-grade securities with the objective of delivering current income while providing capital preservation.
Short-term bond ETFs are also gaining favor as alternatives to money markets as regulators implement new requirements on money market accounts. Specifically, the new rules require institutional prime money market funds to float their net asset value, which will allow the daily share price of the funds to fluctuate along with changes in the market-based value of fund assets, essentially breaking the so-called buck, or constant share price of $1.00, that many have come to expect.
ETF Trends editorial team contributed to this post.