Today, Texas Capital launched its latest fund, the Texas Capital Government Money Market ETF (MMKT ).
MMKT has a net expense ratio of 0.20%. The fund aims to offer strong current income, while maintaining liquidity and stability of principal.
“With the substantial changes in the interest rate environment over the last few years, the Texas Capital Government Money Market ETF offers an exciting alternative for investors,” added Daniel Hoverman, head of corporate & investment banking for Texas Capital.
“As the first ETF committed to following Rule 2a-7, the provision of the Investment Company Act of 1940 that governs money market funds, Texas Capital believes the combination of the tradability of an ETF and the structure of a money market fund will prove an important investment alternative for investors looking to manage liquidity, volatility and credit risks in their securities portfolio," he explained.
In fulfilling its investment objectives, MMKT mostly invests in a mixed portfolio of U.S. government money market instruments. This portfolio is constructed with a quality focus.
Money Market Advantages
The fund prospectus notes that MMKT’s policy is to invest 99.5% or more of its assets in cash, government securities, or repurchase agreements that are fully collateralized. These U.S. government money market instruments carry the additional benefit of paying income that may be exempt from state or local income taxes.
To generate income for the fund, MMKT intends to allocate a significant portion of its assets toward repurchase agreements. By using repurchase agreements, the fund can maintain liquidity while delivering income over a short period of time.
Initially, the fund intends to focus investments on overnight repurchase agreements. However, MMKT may opt to invest in longer-maturity repurchase agreements down the line.
When choosing money market instruments to invest in for the fund, Texas Capital selects options based on relative value, along with market and economic changes. However, the fund also seeks to provide safety of principal, and as such, may stray away from the securities with the highest yield.
“Even with recent Fed rate cuts, many investors want the stability and income generation of a money market fund,” noted Todd Rosenbluth, head of research at VettaFi. “Texas Capital is bringing the strategy to the ETF market, since this is how many people are investing.”
Texas Capital now has four ETFs listed in the United States. As a whole, these funds represent over $52 million in assets under management.
For more news, information, and analysis, visit VettaFi | ETFDB.
