ALPS Launches Intermediate Municipal Bond ETF | ETF Strategy

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SS&C ALPS Advisors launched a new fixed income ETF offering actively managed exposure to a portfolio of mid-term municipal bonds.

Laton Spahr, President of SS&C ALPS Advisors.

The ALPS Intermediate Municipal Bond ETF (MNBD US) was listed on NYSE Arca with a fee rate of 0.50%.

The fund is sub-advised by Brown Harriman Brothers (BBH)the oldest and one of the largest private investment banks in the United States.

Gregory S. Steier, co-head of fixed income at BBH, leads the ETF’s portfolio management, bringing more than 30 years of financial industry experience.

BBH uses a bottom-up investment approach to stock selection, building a balanced portfolio of high-quality municipal bonds offering high tax-free yields with a secondary objective of capital growth.

Both fixed and floating rate securities are eligible for inclusion, while the ETF should favor higher yielding revenue bonds over general bonds. BBH uses proprietary fundamental research to identify sustainable stocks that are expected to be resilient in a variety of economic and political environments.

Each title is assessed across four core pillars: sustainability, which favors titles that fund essential services or critical infrastructure; Transparency, which favors issuers that communicate in a timely manner and do not restrict access to management; Structure, which favors issuers with appropriate levels of leverage and credit protections; and management, which favors issuers that are long-term oriented and treat all of their stakeholders fairly.

ESG factors are also taken into account, although issuers with substandard ESG profiles are not automatically excluded from the selection.

Under normal circumstances, the ETF’s dollar-weighted average duration is expected to be between three and seven years.

According to BBH, the ETF can serve to enhance investors’ portfolios by offering tax-free monthly dividends with a historically low correlation to stocks. It can also generate potentially attractive long-term risk-adjusted returns throughout interest rate and credit cycles, while protecting capital through the fund’s high-quality ballast.

Commenting on the launch, Laton Spahr, President of SS&C ALPS Advisors, said, “SS&C ALPS Advisors continues to deliver a strong suite of active ETF strategies for allocators and investors. 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 building diversified portfolios provides investors with tax-free income, potential for capital appreciation and disciplined risk management.

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