On Thursday, PowerShares rolled out the PowerShares Treasury Collateral Portfolio (NYSEArca: CLTL). CLTL has a 0.08% total expense ratio.
Institutional investors may utilize the ETF as an alternative to clients who need to post collateral to meet margin requirements or non-margin collateral, according to a press release. On the other hand, retail investors may see CLTL as a low-cost option to access safe-haven Treasuries with ultra-short durations.
“As an ETF leader, we’re always looking for new solutions to help institutional and retail clients navigate the evolving macro and regulatory environment,” Dan Draper, Global Head of PowerShares by Invesco, said in a note. “Money market reform will have an impact on US investors going forward, so we’re introducing this Treasury collateral ETF to help ease certain challenges on deck for our clients.”
For instance, in attempt to obviate another debacle in money market funds after the financial downturn, the Securities and Exchange Commission is expected to implement a round of new rules that could change the way the $2.7 trillion money market works, which could potentially trigger billions in outflows from these traditionally safe investments and opening up opportunities in cash-alternatives like ultra-short-duration bond ETFs, like CLTL.