Vanguard Plans TIPS ETF, First Trust Files For High Yield Fund

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Equity markets endured another turbulent trading week as lackluster earnings reports at home along with looming debt drama in the overseas currency bloc continue to plague investors’ confidence. Economic data releases remain mixed on Wall Street, further adding to the growing clouds of uncertainty; new home sales and pending home sales data both missed the mark, while weekly jobless claims helped bring back the bulls and recover a chunk of the losses lost earlier in the week for major indexes. AdvisorShares announced it will be shuttering the doors on the DENT Tactical Advantage ETF (DENT) on August 8, while Vanguard and First Trust both filed for fixed income focused ETFs [see also Commodity Stocks Plays In The 2012 Dividend Achievers].

Industry giant Vanguard has laid down the ground for a new ETF to add to its already extensive lineup of fixed-income offerings [see SEC Filing]:

  • Vanguard Short-Term Inflation-Protected Securities Index Fund: This ETF will be linked to the Barclays Capital U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Years Index (Series-L), which offers exposure to inflation-protected U.S. Treasury securities with a remaining maturity of less than five years. The proposed ETF will charge just 0.1% in annual expense fees, undercutting the popular iShares Barclays TIPS Bond Fund (TIP) which charges 0.2% for identical exposure. The SEC filing went on to mention that Vanguard intends to have the registration statement become effective on October 10 of this year, which means the ETF could launch shortly after that [see Better-Than-AGG Total Bond Market ETFdb Portfolio]. 
After filing for a multi-asset income ETF last week, First Trust is filling the development pipeline with another offering that intends to focus on the high yield corner of the fixed-income market [see SEC Filing]:
  • First Trust High Yield Fund: This actively-managed ETF will have a primary investment objective of generating current income, along with a secondary goal of capital appreciation. The fund will focus on investing in a broadly diversified basket of primarily high-yield debt securities that exhibit strong relative value opportunities in the “junk bond” market. The underlying portfolio may include senior and subordinated corporate debt, senior floating rate loans, unsecured loans, convertible bonds and preferred stocks, as well as investment grade bonds [see also 3 "Dividend ETFs" That Go Beyond Stocks]. 

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Disclosure: No positions at time of writing.

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