Guggenheim, begun trading the Guggenheim Total Return Bond ETF (NYSE Arca: GTO) on Wednesday, February 10, 2016. Here is a synopsis of the new ETF:
FUND INFORMATION:
| Symbol: GTO | Exchange: NYSE Arca |
| Name: Guggenheim Total Return Bond ETF | Net Expense Ratio: 0.50% |
FUND OBJECTIVE:
The Guggenheim Total Return Bond ETF is a portfolio of primarily investment grade fixed income securities across multiple sectors. It is actively managed using a multi-sector strategy and seeking maximum total return.
The ETF will normally invest in a portfolio of fixed income instruments of varying maturities and of any credit quality. The Fund will normally invest at least 80% of its assets in fixed income instruments, which may be represented by certain derivative instruments as discussed below, and also include ETFs and closed-end funds (CEFs) that invest substantially all of their assets in fixed income instruments (which may include ETFs and CEFs affiliated with the Fund).
The fixed income instruments in which the Fund will invest include corporate debt securities of U.S. and non-U.S. issuers, including corporate bonds, and other similar instruments, such as Treasury securities, collateralized loan obligations (CLOs), mortgage-backed securities (MBS) and asset-backed securities (ABS), issued by various U.S. and non-U.S. public- or private-sector entities, and municipal securities, which are debt securities issued by states or local governments and their agencies, authorities and other government sponsored enterprises (Municipal Bonds). Guggenheim Partners Investment Management, LLC (nvestment Adviser) expects that normally the Fund generally will seek to invest at least 75% of its corporate debt securities assets in issuances that have at least $100 million par amount outstanding in developed countries or at least $200 million par amount outstanding in emerging market countries. The Fund may invest up to 33 1/3% of its total assets in high yield debt securities (junk bonds). The Fund may invest in defaulted or distressed securities.
The fixed income instruments in which the Fund will invest also include participations in, or assignments of, bank loans or corporate loans. The Fund may invest up to 20% of its total assets in these instruments (and certain other instruments in which the Fund currently intends to invest to a much more limited extent), which are generally mezzanine secured loans issued by banks and other financial entities to highly-leveraged companies, including floating rate revolving credit facilities, unfunded bridge loans and other similar types of loans. These investments may include participations in, or assignments of, floating rate bank loans that meet certain liquidity standards and will provide for interest rate adjustments at least every 397 days and which may be secured by real estate or other assets. These participations may be interests in, or assignments of, the loan and may be acquired from banks or brokers that have made the loan or members of the lending syndicate.
The Fund’s fixed income instruments may include obligations of non-U.S. governments and their subdivisions, agencies and government-sponsored enterprises, as well as obligations of international agencies or supranational entities. The Fund may invest without limitation in securities denominated in foreign currencies and in U.S. dollar-denominated securities of foreign issuers. The Investment Adviser may attempt to reduce foreign currency exchange rate risk by entering into contracts with banks, brokers or dealers to purchase or sell foreign
currencies at a future dates (forward contracts). The Fund may invest without limitation in debt securities and instruments that are economically tied to emerging market countries. Generally, the Fund considers an instrument to be economically tied to an emerging market country.
The Fund may invest in MBS issued or guaranteed by federal agencies and/or U.S. government sponsored instrumentalities, such as the Government National Mortgage Administration (GNMA), the Federal Housing Administration (FHA), the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (FHLMC). In addition to securities issued or guaranteed by such agencies or instrumentalities, the Fund may invest up to 20% of its total assets in MBS or other ABS issued or guaranteed by private issuers and in asset-backed commercial paper. The MBS in which the Fund may invest may also include residential mortgage-backed securities (RMBS), collateralized mortgage obligations (CMOs) and commercial mortgage-backed securities (CMBS). The ABS in which the Fund may invest include collateralized debt obligations (CDOs). The Fund may invest in equity and/or junior debt securities issued by CDOs, which are subordinated to more senior debt issued by CDOs. CDOs include collateralized bond obligations (CBOs), collateralized loan obligations (CLOs) and other similarly structured securities. A CBO is a trust which is backed by a diversified pool of high risk, below investment grade fixed income securities. A CLO is a trust typically collateralized by a pool of loans, which may include domestic and foreign senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans.
Top Holdings (02/11/2016):
| FEDERATED US TREAS CASH RESERVE INSTITUTIONAL | 37.69% |
| US TREASURY N/B 2.25 11/15/2025 | 24.39% |
| US TREASURY N/B 1.375 1/31/2021 | 15.07% |
| STRIP PRINC 0 11/15/2044 | 10.00% |
| LSTRZ 2014-1 NOTE FRN 9/1/2021 | 1.65% |
| BANK OF AMERICA CORP 6.5 PERPETUAL 10/29/2049 | 1.53% |
| CITIGROUP INC FRN PERPETUAL 7/29/2049 | 1.49% |
| HCA INC 5.875 2/15/2026 | 1.14% |
| HOSPITALITY PROPERTIES T 5.25 2/15/2026 | 1.11% |
| Albertson’s 8/14 Cov-Lite 08/25/21 Term Loan | 1.10% |
Useful Links:
GTO Home Page
Category: Bonds> Global Bonds> Global Diversified Bonds
ETFtrack comment:
Here is a comment from Scott Minerd, Chairman of Investments and Global CIO for Guggenheim Investments: “With the traditional view of core fixed-income management quickly becoming antiquated in a persistent low-yield environment, investors and advisors must begin looking toward alternative solutions.”