Nuveen Investments, which has been angling to get back into the exchange traded funds business after a lengthy absence, filed plans with the Securities and Exchange Commission to possibly launch an aggregate bond ETF, the NuShares Enhanced Yield U.S. Aggregate Bond ETF .
That ETF “would track an index comprised of investment grade government, corporate, residential and commercial mortgage-backed securities and asset-backed bonds. It will track an index called the TIAA Enhanced Yield U.S. Aggregate Bond Index (TIAA Global Asset Management owns Nuveen),” reports Chris Dieterich for Barron’s.
Aggregate bond ETFs, such as the iShares Core U.S. Aggregate Bond ETF (AGG) , which tracks the Barclays Aggregate Bond Index, are favorites among advisors and investors, but these funds are often heavily allocated to Treasuries, implying some level of vulnerability should interest rates climb.
Trending on ETF Trends
With plenty of assistance from the Federal Reserve’s refusal to raise interest rates to this point in 2016, fixed income exchange traded funds have been favored destinations for advisors and investors. Four of this year’s top 10 asset-gathering ETFs are bond funds.
Last year, Nuveen revealed plans to convert some of its commodities mutual funds to ETFs as part of its effort to reenter the ETF business.
Nuveen has not been completely absent from the ETF business. The firm partners with State Street’s (STT) State Street Global Advisors unit on at least seven fixed income ETFs, including the SPDR Nuveen S&P High Yield Municipal Bond ETF (HYMB), SPDR Nuveen Barclays Build America Bond ETF (BABS) and the SPDR Nuveen Barclays Municipal Bond ETF (TFI).
Related: Bond ETF Jitters
“Nuveen applied with the SEC for “exemptive relief” for actively managed and index-tracking exchange-traded funds last year. Nuveen pioneered but didn’t pursue plans more than a decade ago to bring the first bond ETF to market,” according to Barron’s.
For more information on the fixed-income market, visit our bond ETFs category.
Tom Lydon’s clients own shares of AGG.
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