ALPS has today launched an active ETF for investors looking to take advantage of the benefits of hedged bonds, including reliable federal tax-free income, resilience to rising interest rates and strong diversification benefits for balanced portfolios.
the ALPS Intermediate Municipal Bond ETF (MNBD)listed May 20 on the NYSE with an expense ratio of 50 basis points, is under-advised by Brown Brothers Harriman & Cie and employs an asset, bottom-up investment approach to protect investors’ capital and generate attractive risk-adjusted returns, according to a company statement.
MNBD is the third fund in ALPS’ lineup of bond ETFs and the company’s first municipal bond ETF. Other funds, also actively managed, include RiverFront Dynamic Basic Income ETF (RFCI) and the RiverFront Strategic Income Fund (RIGS).
“SS&C ALPS Advisors continues to provide a strong suite of active ETF strategies for allocators and investors,” said Laton Spahr, president of SS&C ALPS Advisors, in a statement.
“Our partner, BBH, is one of the most experienced managers in the market with decades of experience actively managing municipal bonds. Their unique approach to identifying undervalued municipal securities and constructing diversified portfolios offers investors tax-free income, the potential for capital appreciation, and disciplined risk management,” added Spahr.
The fund invests in a differentiated portfolio of high quality municipal bonds, balancing BBH conviction with careful diversification. BBH’s bottom-up investment approach aims to provide peace of mind and supplement tax-free returns with opportunities to earn excess returns. BBH uses independent research and a proprietary quantitative framework to assess the valuation, credit and long-term return potential of each security in the fund. Portfolio exposures are built one bond at a time by adhering to these criteria on a daily basis, according to a statement from the company.
“The great diversity of the municipal bond market offers attractive opportunities for active management. However, the pronounced household ownership in municipalities creates inefficiencies that you don’t find in other major bond market sectors,” Gregory Steier, Director general, Brown Brothers Harriman & Co, said in a statement. “We invest 100% bottom-up and seek to build a differentiated portfolio by holding a limited number of sustainable credits that can offer attractive returns.”
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