ClearShares added its second actively managed ETF that tracks repurchase agreements, or repos, to help fixed-income investors better diversify their bond exposure.
The recently launched ClearShares Ultra-Short Maturity ETF (NYSEArca: OPER) comes with a 0.30% expense ratio.
The active ETF will be managed by Mark N. Hong, Managing Director; Jonathan M. Chesshire, Managing Director; and Eric J. Blasberg, Director.
The ClearShares Ultra-Short Maturity ETF will try to generate current income by investing in repurchase agreements collateralized by U.S. government securities, according to the fund prospectus.
A repurchase agreement is a type of agreement under where the fund acquires a financial instrument, such as a debt security issued by the U.S. government, from a seller. At the time of purchase, the seller agrees to repurchase the underlying security at a mutually agreed-upon price on a designated future date – normally, the next business day. The securities acquired will generally have a total value in excess of the repurchase agreement’s value and will be held by the fund’s custodian until the securities are repurchased. Investors may think of repurchase agreements as a loan collateralized by securities.
The fund may also hold securities issued by the U.S. government, such as Treasury and agency debt like mortgage-backed securities.
“The OPER ETF seeks to fill the return void and provide an alternative to low yielding money market and non-yielding cash positions through short-term fixed income securities. These high-grade securities adjust the interest they pay accordingly as the U.S. Federal Reserve changes market interest rates. As such, OPER ETF investors could benefit from a rise in return as rates increase, and will not be left behind as witnessed from the low returns paid on savings and time deposit accounts,” according to ClearShares.
OPER’s prospectus also clearly states that the ETF is not a money market fund and does not seek a stable net asset value of $1 per share.
For more information on new fund products, visit our new ETFs category.