On Wednesday, Genter Capital Management released a pair of fixed income ETFs. These funds are the Genter Capital Taxable Quality Intermediate ETF (GENT ) and the Genter Municipal Quality Intermediate ETF (GENM ).
Both GENT and GENM utilize active management strategies. Each fund has a net expense ratio of 0.38%. Neither fund intends to replicate the performance of a specific index.
Limited Principal Risk
GENT aims to provide investors with current income and limited risk to principal. The fund also aims to generate capital appreciation.
Primarily, GENT invests in taxable investment-grade securities rated BBB or higher that have an intermediate duration. Investment options include U.S. Treasuries, Treasury Inflation Protected Securities, Floating Rate Notes, and U.S. agency bonds and agency mortgage-backed securities, among others.
Chosen securities each have a weighted average duration of 150% of the Bloomberg Intermediate U.S. Gov/Credit Index, according to the fund prospectus. The prospectus adds that as of December 31st, 2024, the index had a weighted average duration of 3.78 years, and a weighted average maturity of 4.21 years.
Free From Federal Income Tax
Meanwhile, GENM looks to give investors access to current income that is free from federal income tax. Much like GENT, GENM also seeks to provide capital appreciation.
The wide majority of GENM investments will be placed in a diversified portfolio of municipal obligations. While the interest in these investments will be exempt from federal income tax, the fund notes that many securities could be subject to the alternative minimum tax.
The primary municipal obligations the fund invests in are rated A or higher, though the fund may invest up to 30% of assets in BBB-rated options. Even if the fund’s securities become downgraded below investment grade, GENM may still hold the option if the sub-advisor believes it would benefit the fund.
Looking at duration, the fund prospectus notes that GENM currently seeks an average portfolio duration of roughly 2-4.5 years, with an average maturity of about 3-6 years. However, GENM leaves itself free to invest in securities regardless of duration and maturity and may alter its preferred target ranges down the line.
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