On Wednesday, Advisors Asset Management launched the newest fund in its ETF library, the AAM SLC Low Duration Income ETF (LODI).
LODI looks to outpace the total return of the Bloomberg 1-3 Year Government/Credit Index. The fund is actively managed, but has a low net expense ratio of 15 basis points following a fee waiver.
To accomplish its investment objectives, the fund allocates its assets toward investment-grade bonds. However, the fund may also choose to invest in other types of fixed income investments. That said, LODI will not invest more than 15% of its total assets in junk bonds.
The portfolio management for LODI is handled by SLC Management. To choose fixed income securities to add to the fund, SLC uses a research and analysis methodology that blends fundamental and technical factors.
While many fixed income strategies position their strategies around anticipated interest rates, SLC will not do so. Instead, SLC focuses on security-level analysis, seeking assets that are currently being underpriced.
Across the bond market, SLC keeps an eye on the dynamics between bonds and issuers to get a better understanding of their true valuation. This includes a thorough examination of spread correlations across the different asset classes in fixed income.
Advantages of Low Duration Bonds
In typical scenarios, SLC expects LODI’s average portfolio duration to sit at around three years or less. However, this duration can change, and may even exceed the three-year threshold.
With 2025’s rate cycle and economic environment, focusing on individual fixed income opportunities can pay off for investors. Focusing on bonds that may be deeply undervalued can greatly pay off for investors in the long run.
“AAM is proud to deepen its commitment to opportunities within the ETF space by launching LODI in partnership with an exceptional manager in SLC Management who brings decades of expertise in fixed income investing,” said Cliff Corso, president and CIO of AAM. “With today’s dynamic market environment—characterized by shifting interest rates and growing demand for diversified income solutions—LODI is positioned to help investors navigate uncertainty while seeking long-term stability and returns.”
LODI’s launch marks the next step in Advisors Asset Management expanding its ETF selection for investors. Currently, AAM has seven different ETFs listed in the United States. As a whole, these funds represent over $500 million in assets under management.
For more news, information, and analysis, visit VettaFi | ETF Trends.