Grail Advisors has filed preliminary paperwork with the SEC for a Grail Western Asset Enhanced Liquidity ETF. There was no symbol available at this time. The fund’s investment objective is maximum current income, consistent with preservation of capital and daily liquidity. This new fund will compete directly with the Pimco Enhanced Short Maturity Strategy ETF (MINT) and notes a should begin trading on the NYSE in August.

PRINCIPAL INVESTMENT STRATEGIES

The ETF invests, under normal circumstances, primarily in short-term, investment grade fixed income securities.  The ETF will typically invest in money market securities and short-term debt securities, including U.S. treasuries and agencies, corporate and bank obligations, asset backed and mortgage backed instruments, commercial paper and other highly rated, short maturity securities.  While the ETF may invest in securities of any maturity, under normal circumstances, the average duration of the portfolio is typically expected to be one year or less.  Duration is a measure of the underlying portfolio’s price sensitivity to changes in interest rates.

Western Asset, as the ETF’s sub-adviser, employs an active, team-managed strategy and utilizes a top-down economic and interest rate outlook, combined with a bottom-up security selection process. When using a “top-down” approach, Western Asset looks first at broad economic factors and market conditions, such as prevailing and anticipated interest rates.  On the basis of those factors and conditions, Western Asset selects optimal interest rates and maturities and chooses certain sectors or industries within the overall market.  Western Asset then looks at individual issuers within those sectors or industries to select securities for the investment portfolio. While many of the ETF’s investments are expected to be held until maturity they may be sold depending on market conditions, opportunities and valuations.  Western Asset may sell a security before maturity when it is necessary to do so to meet redemption requests.  A security may also be sold if Western Asset believes the issuer is no longer as creditworthy, or in order to adjust the average duration of the ETF’s investment portfolio (for example, to reflect changes in Western Asset’s expectations concerning interest rates), or when Western Asset believes there is superior value in other market sectors or industries.

The ETF invests primarily in investment grade securities (Baa or higher by Moody’s; BBB or higher by S&P) that are rated by at least one nationally recognized statistical rating organization rating that security (a “rating agency”), or if unrated, determined by Western Asset to be of comparable quality.

The ETF may invest in securities issued by the U.S. Government, its agencies and instrumentalities and repurchase agreements for these obligations, mortgage-backed and other asset-backed securities, and obligations of U.S. and non-U.S. banks and other foreign private issuers.  In addition, the ETF may invest in obligations issued or guaranteed by the governments of Western Europe, Australia, Japan and Canada, and commercial paper, including asset-backed commercial paper.  The ETF may only invest in U.S. dollar-denominated securities.  It may also invest in securities of other investment companies.

Unless otherwise stated, all percentage limitations on ETF investments apply at the time of investment.  Under adverse market conditions, the ETF may, for temporary defensive purposes, invest up to100% of its assets in cash or cash equivalents.  To the extent the ETF invokes this strategy, its ability to achieve its investment objective may be affected adversely.

Due to the short-term nature of many of the ETF’s investments, the ETF may have an annual portfolio turnover rate over 100%.

For the full prospectus click: HERE

ETF BASIC NEWS, MINT