A new group of bond funds aims to give investors a way to bet on specific segments of the corporate bond market, potentially creating more control in an interest rate environment that looks to be volatile in 2024. F/m Investments announced Wednesday that it will launch three corporate bond funds targeting certain times to maturity. The funds have shorter time windows than some of the most popular bond funds on the market and, unlike target date-style funds that are designed to hold bonds until they can be redeemed, the F/m ETFs will rebalance to keep a relatively consistent time to maturity. The new suite of funds starts with three offerings: a 2-Year Investment Grade Corporate Bond ETF (ZTWO), a 3-Year Investment Grade Corporate Bond ETF (ZTRE), and a 10-Year Investment Grade Corporate Bond ETF (ZTEN). The funds build on the US Benchmark series, which F/m launched starting in 2022 and give investors tools to target specific maturities on the Treasury curve. The suite of funds has proven popular with investors. The US Treasury 3 Month Bill ETF (TBIL) has jumped to almost $3 billion in assets under management. Several others, including US Treasury 2-Year Note ETF (UTWO) has $368 million and the US Treasury 10-Year Note ETF (UTEN) , has $116 million. “We didn’t set out to do the single [bond] thing. That just happened to be popular and folks caught on to it. We look for the most effective solution,” said Alexander Morris, president and chief investment officer at F/m. In addition to being popular, the funds have generated positive returns in recent months as interest rates have come down. The UTEN, for example, has a total return of 6.2% over the past three months, according to FactSet. UTEN 3M mountain The UTEN fund has gained as interest rates have fallen. The new funds similarly could see solid first-year performance if yields continue to fall, though corporate bonds do have more credit risk than Treasurys. Corporate bond defaults soared 80% in 2023, though…
2024-01-17 11:30:00
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