As the actively managed ETF market continues to see steady growth, PGIM Investments has entered the space with the launch of its first ETF.
The PGIM Ultra Short Bond ETF (NYSE ARCA: PULS) launched on Tuesday with an expense ratio of 0.15%, making it among the most competitively priced active fixed income ETFs currently available, according to Morningstar data as of Feb. 28.
Its risk-managed and short duration approach is designed to help investors hedge against rising rates and enhance or diversify a cash management strategy.
Scott Benjamin, Executive Vice President Head of Product and Marketing, PGIM Investments, told ETF Trends that entering the ETF space was a natural next step to expand its product range.
“Given the clients we have at PGIM Investments, there’s been a number of requests given to this part of the market whether it’s enhanced cash or in this case in an ultra-short duration,” Benjamin told ETF Trends.
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The fund’s senior portfolio managers, Joseph D’Angelo and Douglas G. Smith, who average 32 years of investment experience and 30 years with PGIM Fixed Income, managed $45 billion in short-term strategies as of Dec. 31, 2017.
D’Angelo, Managing Director, Senior Portfolio Manager for PGIM Fixed Income, told ETF Trends that PULS aims to deliver current income and capital appreciation with a focus on managing risk.
“The way we have elected to manage this strategy historically, and in this particular case, is a lot like our multi-sector products in that we’re going to invest in corporate bonds, money market securities, high-quality asset-backed securities and commercial mortgage-backed securities, and even some emerging markets corporate bonds and high-quality CLOs,” D’Angelo told ETF Trends. “With the Fed raising interest rates, this year has been interesting. We came into the year and saw some disconnect in the front end of the market with lots of money in motion. Three-month LIBOR is in 2.3% plus area right now. That’s pretty attractive all things being considered from a cash-type vehicle perspective.”
When you look at this strategy, D’Angelo said it’s not cash, but it must be close from a liquidity management and duration perspective, and that’s how they plan to manage it.
“The potential for earning a yield above 2.3% – whether that’s 2.6% or 2.7% right now – when you combine all of these asset types into the equation,” he said. “It’s coincidentally good timing to launch the ETF.”
For more information on new fund products, visit our new ETFs category.