ETF Spotlight on the FlexShares Ready Access Variable Income Fund (NYSEArca: RAVI), part of an ongoing series.
Assets: $101.8 million
Objective: The FlexShares Ready Access Variable Income Fund is actively managed and tries to generate maximum current income consistent with the preservation of capital and liquidity through short-term, investment-grade debt securities and cash equivalents.
Holdings: Top holdings include Canada Imperial Bank of Commerce 12/11/2015 1.9%, Sumitomo Mitsui 01/10/2017 1.9%, Korea Development Bank 1/22/2017 1.7%, Rabobank Nederland 7/31/2015 1.2%, Bank of Montreal 11/06/2015 1.2% and Pfizer 03/15/2015 1.1%.
What You Should Know:
- Northern Trust’s FlexShares sponsors the ETF.
- RAVI has a 0.25% expense ratio.
- The ETF has 114 components and the top ten holdings make up 13.4% of the overall portfolio.
- Sector allocations include corporate 64.4%, cash 27.6%, government and agency 2.3%, municipal 1.8%, commercial paper 1.5% and MBS/ABS 0.1%.
- Country weights include U.S. 74.9%, Canada 9.0%, Netherlands 3.3%, U.K. 2.9%, Japan 2.1%, France 2.0%, South Korea 1.7%, Australia 1.1%, Sweden 0.9% and Italy 0.9%.
- RAVI has a 0.68 effecitve duration and a 0.49% 30-day SEC yield.
- The fund is down 0.07% over the past month, down 0.06% over the past three months and up 0.64% over the past year.
- Due to the fund’s ultra-short-term debt exposure, investors may utilize the ETF as a cash or money market alternative.
Next page: The latest news
The Latest News:
- Ultra-short-term bond funds have seen yields rise as investors anticipate the eventual Federal Reserve rate hike. [Short-term, Money Market Bond ETFs Reveal Rising Rate Expectations]
- However, a surprise dip in hourly U.S. wage growth over December overshadowed economic improvements, pushing investors back into bonds, reports Joseph Adinolfi for MarketWatch.
- With concerns over wage growth marring a rosy economic outlook, the Fed could push off on rates, Naeem Aslam, an analyst with Avatrade, said in the article.
- “[The payrolls data was] a balanced mix and a Fed dilemma in the sense that you have the jobs strength but no sign of wage inflation,” David Ader, head of government bond strategy at CRT Capital Group LLC, said in the article.
- Consequently, with the pullback in rate expectations, short-maturity bonds experienced the largest move, with two-year yields dipping to their lowest since December 16 – yields and bond prices have an inverse relationship, so lower yields correspond to higher prices.
FlexShares Ready Access Variable Income Fund
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.