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Short-Duration ETFs Can Substitute for Money Market Funds


MINT (PIMCO Enhanced Short Maturity Strategy, Expense Ratio 0.35%) has had a strong week in terms of net asset flows and trading volume, reeling in about $200 million in recent sessions, which is significant given the funds asset base of $2.8 billion.

Having covered MINT early on, from its inception in November of 2009, watching the fund grow to 328,000 shares traded on an average daily basis as well as having strong name/concept familiarity among most RIA and institutional ETF managers is satisfying, because the fund itself basically was a trailblazer for a new niche within the ETF landscape: “Money Market” type funds.

We have traditionally seen managers allocate to MINT as a “cash” vehicle, and they often find appeal in the “ultra-low” duration target for the fund as well as relative yield (Estimated YTM 0.90%, SEC 30-Day Yield 0.58%). [Money Fund Reform Puts Short-Duration Bond ETFs in Focus]

Couple this with the fact that the portfolio holdings are highly visible and regularly disclosed and throw in the kicker of PIMCO’s sterling reputation in the greater fixed income management space, and you have a winner, at least according to
the reaction thus far in the marketplace (fund stands to cross the $3 billion mark shortly).

Two other funds are currently categorized alongside MINT as well, both of them smaller in terms of assets under management.

GSY (Guggenheim Enhanced Short Duration Bond, Expense Ratio 0.27%) debuted in 2008 and has north of $320 million in AUM, and the newer RAVI (FlexShares Ready Access Variable Income Fund, Expense Ratio 0.25%) which only arrived in October of last year (2012).

Awareness will likely grow the familiarity levels and asset sizes of these funds over time, as many managers that have typically used money market mutual funds in their portfolios for various purposes, will ultimately find utility in “Money Market” type ETFs such as those mentioned.

PIMCO Enhanced Short Maturity Strategy

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

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