Tidal ETF Services has launched its first ETF in partnership with Aware Asset Management, a Minnesota-based asset manager focussed on fixed-income portfolio management.
The Aware Ultra-Short Duration Enhanced Income ETF (AWTM) is an actively-managed fixed income ETF designed specifically for the unique needs of investors looking for cash-plus solutions.
The Aware Asset Management team has a long history of managing insurance company assets, and has leveraged this experience in designing AWTM. “We developed this ETF as an alternative to earnings credits, commercial paper, and money market funds,” says John Orner, President and CIO. “We believe we have built a liquid, diversified, cost-effective solution that seeks to preserve capital while maximising current income.”
Built from the ground up, AWTM targets a gross yield of 0.75 per cent to 1.00 per cent over the most recently-issued three-month US Treasury Bill Yields.
“Generating high returns with low risk is our objective. To succeed, we focus on the risk,” says Orner. “We see great opportunity for investors at the short end of the yield curve, especially since the current flat yield curve fails to offer incentive to increase durations.”
“AWTM offers the opportunity for attractive yields in a diversified basket and has less exposure to interest rates due to its ultra-short duration, which we define as less than one year. Moreover, the active management provides fixed income investors with the opportunity to outperform and enables portfolio managers to quickly respond to changing market conditions. We also see AWTM as a potential alternative to commercial paper for treasury managers with greater liquidity due to its exchange-traded structure,” says John Kaprich, CFA, Investment Director.
AWTM offers the hallmark benefits of the ETF structure, including transparency, liquidity, and the ability to trade throughout the day. The fund launches with an expense ratio of 0.23 per cent, and will provide investors with monthly interest distributions.
The alignment of client and investment manager goals is the single most important aspect of investing. Without it, the results fall short.” Kaprich says. “We believe we offer a valuable tool in our treasurer’s toolbox and believe we’re offering a one-stop solution that offers the best of both worlds: quality and yield.”