As many investors extend duration, it’s important not to overlook ultrashort debt ETFs.
Ultrashort debt ETFs like the Eaton Vance Ultra-Short Income ETF (EVSB ) offer many benefits: liquidity, lower sensitivity to interest rates, and income generation.
Additionally, it may benefit investors to maintain portfolio diversification across maturities – even as extending duration looks more appealing than it has in recent years.
EVSB provides exposure to a diversified portfolio of investment grade, short-term fixed, variable, and floating-rate income-producing securities. The underlying securities are managed to have an overall portfolio duration of one year or less.
The ultrashort debt ETF is actively managed, drawing upon the expertise of Eaton Vance’s broad markets fixed income team. The investment team employs a multi-sector investment approach, according to Morgan Stanley Investment Management.
The fund’s 30-day SEC yield is 5.75% as of February 9.
Ultrashort debt ETFs focus exposure on securities with very short durations. This means these funds effectively have minimal interest rate sensitivity compared to longer duration fixed income products. Furthermore, this can reduce overall duration risk in a portfolio.
On the other hand, while ultrashort debt ETFs may offer a lower yield than longer dated maturities, they tend to offer higher yields than money market instruments. These are a few reasons why investors may want to keep ultrashort debt ETFs as a long-term holding in a portfolio.
Ultrashort Debt ETF ‘EVSB’ Taps Firm’s Extensive Expertise
Morgan Stanley Investment Management entered the ETF space one year ago with the launch of six Calvert ETFs. Since then, the firm has launched a handful of other funds via its Eaton Vance and Parametric brands.
The firm last week launched an actively managed strategy providing access to loan investing in a tradable format: the Eaton Vance Floating-Rate ETF (EVLN ).
For more news, information, and analysis, visit The ETF Yield Channel.