AB Converts Short Duration Mutual Funds Into ETFs | ETF Trends

On Monday, AllianceBernstein completed the conversion of two of its actively managed mutual funds into ETFs. The AB Short Duration Income ETF (NYSE Arca: SDFI) and AB Short Duration High Yield ETF (NYSE Arca: SYFI) have expense ratios of 0.30% and 0.40%, respectively.

“Today’s launch demonstrates AB’s robust global fixed income business, adding additional building blocks for efficient income,” Scott DiMaggio, head of fixed income at AB noted.

“These conversion products offer a wrapper that is investment-model friendly, and we believe they will ultimately fit into client portfolios in multiple economic cycles,” he added.

2 Angles on Short Duration Fixed Income

SDFI’s fixed-income portfolio aims for a dollar-weighted average duration of three years. The fund selects its portfolio using criteria like credit quality and how sensitive the securities are to interest rates. It has $101.2 million in assets under management currently and first became available as a mutual fund in 2018.

Meanwhile, SYFI targets the junk bond space and a dollar-weighted average duration of four years. The AllianceBernstein website notes that SYFI has steered away from 75% of the defaults within the domestic high-yield space. The fund’s prospectus says it can invest in both foreign and domestic securities. It also looks to exploit inefficiencies in the bond market using a wide range of data. Meanwhile, the fund’s objective is to maximize the income it provides investors. With an inception dating back to 2011, SYFI has $676.2 million in assets under management.

“Advisors have increasingly shown interest in active fixed income ETFs this year. These are extremely timely launches given the rapid rise in demand for fine-tuned tools for targeting shorter duration,” said VettaFi Senior Industry Analyst Kirsten Chang.

AB Funds’ ETF lineup now includes 14 funds with roughly $3.7 billion in combined assets under management.

For more news, information, and analysis, visit VettaFi | ETF Trends.