Vident Financial, the exchange traded funds issuer behind the rapidly successful Vident International Equity Fund (VIDI) , added its third ETF today with the debut of the Vident Core U.S. Bond Strategy ETF (VBND).
Like its other ETFs, VIDI and the Vident U. S. Core Equity Fund (VUSE) , the Vident Core U.S. Bond Strategy ETF tracks a rules-based index aimed at damping investor risk. In the case of VBND, the new ETF’s strategy seeks to mitigate common risks associated with bonds, including credit, inflation, counter-party and star-manager risk.
VBND’s “strategy employs a systematic, rules-based, and transparent process that seeks to allocate capital among core fixed income sectors as well as high yield and Treasury Inflation-Protected Securities (TIPS). The Strategy Index also seeks to improve exposure to bond issuers within the investment grade and high yield corporate sectors by identifying companies with stronger relative governance, leadership and creditworthiness factors. The Strategy Index is rebalanced monthly and reconstituted quarterly,” according to a statement issued by Atlanta-based Vident.
VBND’s value-drive approach ensures that the ETF’s allocations are systematically reweighted based on changes in value scores.
The Vident Core U.S. Bond Strategy Index (VBNDX), which was established last month, has an effective duration of 4.87 years and its components have an average rating of AA, indicating VBND will generally be home to high quality issues. U.S. Treasuries account for over 51% of the index with mortgage-backed securities checking in at 27.8%, according to Vident data. Corporate bonds are 15% of the index’s weight.
Nearly 32% of the index’s holdings have maturities of three to five years with another 43% going to bonds that mature in five to seven years.
Although VBND is just Vident’s third ETF, the issuer has quickly shown its ability to attract investor assets. VIDI was one 2013’s most successful ETF launches, surging to $500 million in assets under management in just 12 weeks. [Vident International ETF Races to $500M in AUM]
VUSE is off to a solid start as well. The ETF, which debuted in January, has nearly $170 million in AUM, a total surpassed by just three other ETFs that have launched this year. [Another Decent Year for New ETFs]
ETF Trends editorial team contributed to this post.
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