A Solid Idea Among Rookie Bond ETFs

Hundreds of new exchange traded funds came to market this year. One of the more interesting elements regarding new ETFs in 2016 was the return to the industry by Nuveen Investments, a division of TIAA Global Asset Management.

In September, Nuveen launched the NuShares Enhanced Yield U.S. Aggregate Bond ETF (NYSEArca: NUAG) as alternative to traditional aggregate bond funds. NUAG seeks to offer enhanced yield relative to the broad, investment-grade fixed income market with comparable risk and credit quality.

Rather than weighting by capitalization, the Enhanced Index assigns component securities into a variety of categories based upon asset class, sector, credit quality, and maturity, and then uses a rules-based methodology to allocate higher weights to categories with the potential for higher yields without significantly increasing risk or decreasing credit quality.