Smart Beta and Fixed Income Meet With These New ETFs

Smart beta is making its way to fixed income exchange traded funds and IndexIQ is helping speed that movement along. Last month, IndexIQ introduced the IQ Enhanced Core Bond U.S. ETF (NYSEArca: AGGE) and the IQ Enhanced Core Plus Bond U.S. ETF (NYSEArca: AGGP).

Both new funds are ETFs of ETFs, meaning that their holdings are other ETFs.

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AGGP’s underlying index yields 2.63 percent, according to issuer data. The new ETF charges 0.35 percent a year, or $35 per $10,000 invested.

“Emerging market debt has been a strong performer to start 2016, driven in large part by ongoing dovish Federal Reserve policies, improving emerging market fundamentals and a suddenly weakening dollar,” said Salvatore Bruno, CIO of IndexIQ, in a statement. “For the ‘core plus’ approach used in AGGP, we felt it was important to have this exposure as one area our index and the fund could access when total return momentum was in the category’s favor.”