Nuveen has expanded its line of NuShares exchange traded funds with another fixed-income offering, helping bond investors gain core exposure to the short-end of the yield curve with a smart beta twist.
Nuveen recently launched the NuShares Enhanced Yield 1-5 Year U.S. Aggregate Bond ETF (NYSEArac: NUSA). NUSA comes with a 0.20% expense ratio.
The NuShares Enhanced Yield 1-5 Year U.S. Aggregate Bond ETF tries to reflect the performance of the BofA Merrill Lynch Enhanced Yield 1-5 Year US Broad Bond Index, which is represented by a modified version of the more widely observed BofA Merrill Lynch 1-5 Year US Broad Market Index.
The Enhanced Index does not weight components by market capitalization, instead opting to assign components into a variety of categories based upon asset class, sector, credit quality and maturity. The smart beta indexing methodology then utilizes a rules-based process to include higher weights to categories with higher yields while maintaining risk and credit quality at levels similar to the Base Index.
The smart beta bond ETF will largely include U.S. dollar-denominated investment-grade taxable debt securities with remaining term to final maturity of less than five years and at least one year until final maturity.