Nuveen Rolls Out Aggregate Bond ETF
Nuveen, a unit of TIAA Global Asset Management, made its long-awaited reentry into the exchange-traded funds business Thursday with the debut of an aggregate bond fund.
The NuShares Enhanced Yield U.S. Aggregate Bond ETF (NYSE: NUAG) is the first ETF to launch on Nuveen's NuShares platform. NUAG tracks the Bank of America Merrill Lynch Enhanced Yield U.S. Broad Bond Index.
NUAG “offers the potential for enhanced yield with the risk and credit quality profile of the broad investment grade fixed income market. The Fund invests primarily in U.S. government securities, debt securities issued by U.S. corporations, residential and commercial mortgage-backed securities, asset-based securities and U.S. dollar-denominated debt securities issued by non-U.S. governments and corporations,” according to Nuveen.
NUAG debuted with $50 million in assets under management, immediately making it one of the more successful ETFs to debut this year.
The new ETF has nearly 260 holdings. The bulk of NUAG's top 10 holdings are U.S. dollars and U.S. government debt.
NUAG's “Enhanced Index uses a rules-based methodology that allocates higher weights to securities and sectors that have the potential for higher yield while maintaining comparable risk,” according to Nuveen. Those traits could make the rookie fund an attractive alternative to traditional, cap-weighted aggregate bond ETFs.
Nuveen is not likely to stop with NUAG when it comes to its ETF efforts. Earlier this week, a statement revealed the Securities and Exchange Commission (SEC) has extended the review period for Nuveen's plans to convert the Nuveen Diversified Commodity Fund (NYSE: CFD) and Nuveen Long Short Commodity Total Return (NYSE: CTF) to the ETF structure.
“If the SEC approves the proposed rule, the funds intend to complete their conversion to ETFs as soon as practicable thereafter,” said Nuveen in the most recent statement.
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