Eaton Vance Management rolled out a new NextShares exchange traded managed fund, or ETMF, to generate high level of current income by tracking float-rate loans.
Eaton Vance recently came out with the Eaton Vance Floating-Rate NextShares (NasdaqGM: EVFTC), which has a 0.73% total expense ratio.
The new fund is managed by Scott H. Page, Vice President of Eaton Vance and BMR, and Craig P. Russ, Vice President of Eaton Vance and BMR.
“For nearly three decades, Eaton Vance has been recognized as one of America’s largest and most experienced loan managers,” Page said in a note. “Investments in floating-rate loans can provide investors with important diversification benefits and protect against the potential risks of rising interest rates.”
EVFTC tries to generate high level of current income by investing in senior floating rate loans of domestic and foreign borrowers. Senior loans typically are of below investment grade quality and have below investment grade credit ratings, which ratings are associated with securities having high risk, speculative characteristics, according to a prospectus sheet.
The ETMF may hold up to 25% of its total assets in foreign Senior Loans denominated in U.S. dollars, euros, British pounds, Swiss francs, Canadian dollars, or Australian dollars. The fund may also invest in secured and unsecured subordinated loans, second lien loans and subordinated bridge loans or so-called junior loans, other floating rate debt securities, fixed-income debt obligations and money market instruments.
The other floating rate debt securities, fixed-income debt securities and money market instruments may include bonds, notes and debentures issued by corporations; debt securities issued or guaranteed by the U.S. government or one if its agencies or instrumentalities; and commercial paper.
ETMFs are not exchange traded funds. Eaton Vance has a launched a number of products under its NextShares brand, covering a relatively new structured product called exchange traded managed funds, or ETMFs, a hybrid of what some consider the best parts of actively managed mutual funds with an exchange traded fund-esque structure.
ETMFs are a new concept that marry the liquidity and tax efficiencies that have attracted investors to ETFs with active investment strategies, while maintaining the confidentiality of current portfolio trading information to protect a manager’s “secret sauce.” Unlike traditional ETFs, ETMFs will not disclose holdings on a daily basis. The patented methodology allows the funds to trade just once per day at the close of business, but investors can still buy and sell ETMFs in real time during normal hours. Consequently, investors who enter a trade during the day will pay a slight premium to net asset value to acquire shares or receive slightly less than NAV to sell.
For more information on exchange traded managed funds, visit our ETMFs category.