Investors looking to add bond exposures should consider the +Natixis Loomis Sayles Short Duration Income ETF+ (LSST ). The fund makes a strong complement to a fixed income portfolio, adding diversification to longer-duration exposures.
Investors continue increasing their fixed income portfolios this month in hopes of interest rate cuts in September. While many advisors and investors are looking to the longer end of the yield curve, including short-duration funds may enhance portfolio diversification.
LSST is actively managed and uses top-down macro analysis and bottom-up sector and security selection. An actively managed fixed income strategy brings the added benefit of risk awareness and response that passive bond investing may not provide. LSST seeks to offer a balanced risk and reward profile against its benchmark, the Bloomberg US Government/Credit 1-3 Year Bond Index.
See also: 3 Tips When Looking to Short-Term Bonds
Active Management Within Fixed Income
The starting universe for the fund includes U.S. Treasuries and agencies, mortgage-backed securities (MBS), and commercial mortgage-backed securities (CMBS). It also includes asset-backed securities (ABS) and U.S. and non-U.S. domiciled investment-grade corporate bonds.
LSST’s strategy diversifies across sectors, including securitized debt and below-investment-grade bonds. When investing, the strategy relies on insights from the Loomis Global Asset Allocation Team. They consider inflation, global interest rates, the economic environment, and how asset classes perform in differing economic environments.
The management team measures the risk of such investments against the income and return potential when investing. Those securities that rate less than investment grade are constrained to 15% of the fund’s portfolio. All investments are U.S. dollar-denominated.
As of 08/12/2024, the fund’s effective duration was 1.81 years, and its 30-day SEC yield was 4.75%.
LSST has an expense ratio of 0.35% with a contractual waiver that expires on 04/30/2026.
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