Grail Advisors Is Set To Begin Trading The “Grail McDonnell Core Taxable Bond ETF” (GMTB) Tomorrow January 29th

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January 28, 2010 12:21pm NYSE:GMTB

new8Grail Advisors is set to begin trading the “Grail McDonnell Core Taxable Bond ETF” (GMTB) tomorrow January 29th. Grail states in the prospectus that the investment objective of this fund is to


provide a high level of current tax-exempt income and higher risk-adjusted returns relative to its benchmark. The fund’s benchmark is the “McDonnell’s Core Taxable Bond Composite.” This ETF is actively managed and is not an index fund and thus do not seek to replicate the performance of a specified index.

PRINCIPAL INVESTMENT STRATEGIES

The ETF invests, under normal circumstances, at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in debt securities. The ETF will invest primarily in investment-grade securities, including securities issued by the U.S. Government, its agencies and instrumentalities, municipal securities, mortgage-backed and other asset-backed securities, and corporate and bank obligations, including commercial paper, corporate notes and bonds. While the ETF may invest in securities of any maturity, under normal circumstances, the average duration of the portfolio is typically expected to range from three to six years. Duration is a measure of the underlying portfolio’s price sensitivity to changes in interest rates.

McDonnell, as the ETF’s sub-adviser, employs a total return investment strategy which emphasizes sector and security selection and yield curve positioning. Sector and security decisions are reached through robust fundamental credit analysis as well as an assessment that incorporates the sector and security’s credit momentum. The total return strategy places a limited dependence on adjusting the portfolio in anticipation of a change in the level of interest rates.

The ETF invests primarily in investment grade securities, which are securities rated in one of the top four credit quality categories by at least one nationally recognized statistical rating organization rating that security (a “rating agency”). The ETF may invest up to 20% of its net assets in high yield securities or below investment-grade securities rated BB+ (or comparable) or below by a rating agency or, if unrated, determined by McDonnell to be of comparable quality.

The ETF may invest without limit in securities issued by the U.S. Government, its agencies and instrumentalities, up to 90% of its assets in mortgage-backed and other asset-backed securities, and up to 80% of its assets in corporate bonds. In addition, the ETF may invest up to 30% of its assets in municipal securities. The ETF may only invest in U.S. dollar-denominated securities. It may also invest in securities of other investment companies, including other ETFs and money market funds.

The ETF may invest in derivative instruments, such as futures and interest rate, total return and credit default swaps. Investments in derivatives must be consistent with the ETF’s investment objective and may only be used to manage risk and not to enhance leverage. Use of certain derivative instruments may give rise to taxable income.

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 to 100% of its assets in cash or cash equivalents, including investment grade short-term

FEES AND EXPENSES

Shareholder Fees (fees paid directly by Authorized Participants)

 

 

 

Sales Charge (load) Imposed on Purchases:

 

None

 

Transaction Fee on Purchases and Redemptions:

 

Varies

(1)

Annual Fund Operating Expenses (expenses that are deducted from ETF assets)

 

 

 

Management Fee:

 

0.30

%

Distribution and/or service (12b-1) fees: (2)

 

0.00

%

Other Expenses: (3)

 

0.28

%

Total Annual Fund Operating Expenses:

 

0.58

%

Less: Expense Reduction/Reimbursement: (4)

 

0.23

%

Net Annual Operating Expenses: (4)

 

0.35

%

 

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