Virtus Targets Short-Duration Debt From Multiple Bond Sectors

The Virtus Newfleet Short Duration Core Plus Bond ETF (NYSE Arca: SDCP) launched today on the New York Stock Exchange. The actively managed ETF invests primarily in investment-grade, short-duration debt securities from multiple bond sectors.

SDCP seeks to provide a high level of total return, including current income, while limiting fluctuations in net asset value. It seeks opportunities across undervalued areas of the fixed income markets through a disciplined investment process and risk management approach.

See more: “Virtus and VettaFi: A Primer on Private Credit and Preferreds

The fund’s sub-advisor Newfleet Asset Management leverages its team’s expertise in every sector of the bond market. This includes evolving, specialized, and out-of-favor sectors. The team employs active sector rotation and disciplined risk management to portfolio construction.

SDCP targets a duration of 1-3 years. It can invest in below investment grade securities and developed markets debt to identify attractive yield opportunities.

“We have seen tremendous demand for fixed income ETFs in 2023,” said VettaFi’s head of research Todd Rosenbluth. “Despite representing a 20% share of the ETF market, these ETFs have pulled in approximately 40% of new money. The growing supply of products will meet advisors where they are.”

SDCP charges 35 basis points.

Seeking Income: An Overriding Theme of 2023

At Exchange 2023, Virtus ETF Solutions Income Strategist James Jessup said that “income is the overriding theme of essentially all the conversations” he’s having. According to Jessup, income is important “for a number of reasons.” One reason being, “nation is getting older.” This means that their resources “have to last longer.”

Another reason is inflation. “You’ll find out that in fact inflation has arrived,” he said. “And that erodes the buying power of those assets.”

Finally, “there wasn’t really a good place to go” and “no good place to hide” within fixed income last year. Per Jessup, 2022 “was a challenging year.”

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