Global brokerage infrastructure platform DriveWealth, LLC has announced the planned launch of a new line-up of yield-focused fixed income ETFs, providing retail investors alternatives to low yielding cash accounts.
The new ETFs will be powered by the YieldX platform, an API-driven fixed income digital platform that leverages AI with the aim to optimise yield, expenses and risk-adjusted returns based on investors’ desired risk/reward profiles.
DriveWealth has launched two ETFs on the NYSE Arca platform – DriveWealth Steady Saver, ETF ticker: STBL, and DriveWealth Power Saver, ETF ticker: EERN, with target net yields of 3 per cent and 8 per cent respectively.
DriveWealth’s global B2B partners will also have the opportunity to ‘white-label’ the ETFs or work with YieldX to create their own suite of custom, branded fixed income ETFs suitable for their customer base.
“For too long, bank savings accounts and CDs have yielded next to nothing, and in many parts of the world, savers are effectively forced to pay banks to keep their money,” says Bob Cortright, Founder and CEO of DriveWealth.
“This has led to a lot of frustration as consumers desire to earn something on their hard-earned savings without taking too much risk. Our partners have been asking for thoughtful solutions to this problem—their investors want access to investments that provide income, diversification and an attractive return on capital. With YieldX, we believe we’re bringing innovative technology, investing and risk management processes from a proven team of Wall Street veterans straight to Main Street for the benefit of yield-starved global consumers. The DriveWealth ETFs can be an important part of a saver’s financial picture and a retail investor’s overall portfolio.”
The DriveWealth ETFs will be actively managed by the YieldX team of experienced portfolio managers and quantitative analysts leveraging their unique analytics platform, which aims to optimise target yield levels while minimising the risk and expense taken for each unit of income.
STBL utilises the Bloomberg Barclays US Universal Bond Index as the primary index and the YieldX Optimized Liquid Income Index as the secondary index. EERN utilises Bloomberg Barclays US Corporate High Yield Index as the primary index and the YieldX Optimized Liquid Income Target 6% Volatility Index as the secondary index. The YieldX Optimized Liquid Income Index (YOLI) is an independently-verified and calculated index that aims to produce higher yields, less volatility and increased diversification for income-seeking investors over the last decade.
“As a leader in embedded finance, DriveWealth is a great partner for YieldX. We are both technology-forward companies with a mission of making investing easy and accessible to retail investors everywhere. The DriveWealth ETFs are hoping to provide savers and retail investors access to income-generating investment strategies, underpinned by institutional grade portfolio construction, optimization, and risk analytics that have only been previously available to Wall Street clients—this is so powerful,” says Adam Green, CEO of YieldX
The DriveWealth Steady Saver ETF (STBL) is designed to generate monthly income and offer savers an attractive yield over CDs or money market funds. STBL seeks to generate a target net yield of 3 per cent while aiming to minimise the risk level relative to similar-yielding products. The DriveWealth Steady Saver ETF will have an expense ratio of 0.66 per cent.
The DriveWealth Power Saver ETF (EERN) is designed for investors looking to diversify their equity portfolio with an income-producing fixed income vehicle. EERN seeks to target a net yield of 8 per cent while aiming to minimise the risk level relative to similar-yielding products. The DriveWealth Power Saver ETF will generate monthly income and have an expense of 1.49 per cent.
DriveWealth ETFs will be administered by The RBB Fund, Inc, an industry-leading series trust platform for funds with over 40 mutual funds and ETFs and approximately USD18 billion in assets under management (AUM). Arnie Reichman, the Fund Chairman, says: “Our most recent relationship with DriveWealth and YieldX illustrates RBB’s continued product innovation in the Series Trust space.”
Salvatore Faia, RBB’s President, says that RBB is the only independent Series Trust with end-to-end adviser solutions. STBL and EERN will be advised by Red Gate Advisers, LLC. Vident Investment Advisory will serve as sub-adviser to the DriveWealth ETFs. US Bank will serve as the custodian, fund administrator and transfer agent for the DriveWealth ETFs.