Principal Financial Enters ETF Fray With Multi-Asset Fund

Principal Financial Group’s (NYSE: PFG) Principal Global Investors marked its entry to the exchange traded funds industry today with the debut of the Principal EDGE Active Income ETF (NYSEArca: YLD).

The Principal EDGE Active Income ETF, subadvised by Principal’s EDGE Asset Management unit, is an actively managed multi-asset fund. Multi-asset exchange traded funds have provided diversified exposure to a group of various asset classes and generated attractive yields and have become income investor favorites as advisors and investors searched for new yield sources amid several years of rock-bottom U.S. interest rates. [Multi-Asset ETFs Offer High Yields, But Exposed To Rate Risk]

YLD “seeks to generate consistent income through changing market environments and over market cycles. It invests opportunistically across a diversified range of income-generating asset classes while managing for risk. EDGE’s proven investment process, long history of income investing, and strong risk management and credit research capabilities may help enhance returns while reducing risks,” according to a statement issued by Iowa-based Principal Financial.

Multi-asset ETFs usually hold common stocks, master limited partnerships (MLPs), closed end funds, real estate investment trusts (REITS), preferred stocks and more. This multi-asset approach has also provided a investors with a diversified approach to income investments. As one asset class slowed, other areas would take the lead, helping bolster the performance of the funds as interest rates sagged. [Multi-Asset ETFs With big Yields]

Principal signaled its desire to enter the rapidly-growing ETF business in March when it announced hiring of Paul Kim as managing director and head of ETF strategy. Previously, Kim was a senior vice president and ETF product manager at PIMCO, one of the largest managers of actively managed ETFs.

At the end of 2014, Principal had $342.9 billion in client assets. The firm’s clients include public and private pension funds, central banks, sovereign wealth funds, life insurance companies, multi-manager platforms, foundations and endowments.

YLD charges 0.85% per year.
ETF Trends editorial team contributed to this article.

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