Market Overview

Every Friday Could Be Payday If This ETF Comes To Life

Every Friday Could Be Payday If This ETF Comes To Life

With interest rates at historically low levels, investors are scrambling for ways to find income. If a new exchange-traded fund comes to life, it could be a compelling solution in the income equation.

What Happened: Last week, fintech firm and upstart ETF issuer SoFi filed plans for the SoFi Weekly Income ETF, which will carry the ticker “TGIF” because the plan is for the fund to make a distribution to investors on a weekly basis.

TGIF is slated to be an actively managed ETF, though the current funds in the SoFi stable are passively managed equity-based products.

Why It's Important: TGIF will hold investment-grade and junk corporate debt.

“While obligations of any maturity may be purchased, under normal circumstances, the Fund will generally have a short to intermediate overall effective duration (i.e., typically less than three years),” according to a SoFi filing with the Securities and Exchange Commission.

The weekly income gambit is undoubtedly unique in the world of fixed income ETFs because essentially all of the funds in this category distribute income to investors on a monthly basis.

"The Fund may invest in a variety of fixed income instruments with a fixed or floating (variable) interest rate. The Fund may hold U.S government securities, including Treasury securities, Treasury Inflation Protected Securities ('TIPS'), and agency bonds,” according to the filing.

“The Fund may also invest in corporate debt, commercial and residential mortgage-backed securities ('CMBS' and 'RMBS', respectively) (including collateralized mortgage obligations ('CMOs'), including interest only and principal only instruments), asset-backed securities ('ABS'), municipal securities, convertible securities, pass-through securities, and U.S. dollar denominated securities issued or guaranteed by foreign governments, their agencies, or instrumentalities, and floating rate securities (such as bank loans).”

What's Next: A filing for a new ETF with a ticker can often be a sign that launch is coming somewhat soon, but for now the TGIF filing doesn't include an expense ratio, which is usually a prime tell regarding imminent debut.

Issuers typically can't comment on how soon a fund is coming to market after filing with the SEC, so it's anyone's guess as to when income investors will be able to access TGIF.


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