Guggenheim has filed paperwork with the SEC for a “Guggenheim Enhanced Short Duration High Yield Bond ETF.” They did not note a trading symbol or operating expenses in the initial filing. The Guggenheim Enhanced Short Duration High Yield Bond ETF (the “Fund”) seeks to maximize total return, through monthly income and capital appreciation, consistent with capital preservation.
Principal Investment Strategies
The Fund uses an actively managed strategy that seeks to maximize total return, comprised of income and capital appreciation, and risk-adjusted returns in excess of the [(the “Benchmark”)] while maintaining a low risk profile versus the Benchmark. The Fund will primarily invest in below investment grade rated bonds while opportunistically allocating to investment grade bonds and other select securities. The securities in which the Fund will invest will have a near-term maturity and/or an effective duration of one year or less.
Under normal circumstances, the Fund will invest at least 80% of its net assets in securities which are below investment grade and are referred to as “high yield” bonds (also known as “junk bonds”). Bonds are considered to be below investment grade if they have a Standard & Poor’s or Fitch credit rating of “BB+” or lower or a Moody’s credit rating of “Ba1” or lower (collectively or individually “Below Investment Grade”) or bonds that are unrated and deemed to be of below investment grade quality as determined by the Adviser. The Fund may also invest in floating rate or adjustable rate bonds, callable bonds with, as determined by the Adviser, a high probability of being redeemed prior to maturity, Rule 144A securities, “putable” bonds (bonds that give the holder the right to sell the bond to the issuer prior to the bond’s maturity) when the put date is within a 24 month period, “busted” convertible securities (a convertible security that is trading well below its conversion value minimizing the likelihood that it will ever reach its convertible price prior to maturity), bank loans and other types of securities, all of which may be rated at or below investment grade. The interest rate on these securities typically resets every 90 days based upon then current interest rates. The Fund will not invest in securities in default at the time of investment. The Fund may invest up to [20%] of its net assets in bank loans. Any bank loans will be broadly syndicated and may be first or second liens; the Fund will not invest in third lien or mezzanine loans.
The management process is intended to be highly flexible and responsive to market opportunities. For example, when interest rates are low and credit markets are healthy, the Fund may overweight callable bonds relative to the Benchmark, as well as bonds that are subject to company repurchases and tender offers. In weaker credit markets, the Fund may be overweight bonds relative to the Benchmark that are at maturity or have putable features. The Adviser anticipates that under normal circumstances the Fund will invest approximately 20% of its assets in securities that will be called, tendered, or mature within 60 to 90 days.
The Adviser commences the investment review process with a top-down, macroeconomic outlook to determine both investment themes and relative value within each market sector and industry. Within these parameters, the Adviser then applies detailed bottom-up security selection to select individual portfolio securities that the Adviser believes can add value from income and/or the potential for capital appreciation. Credit research may include an assessment of an issuer’s profitability, its competitive positioning and management strength, as well as industry characteristics, liquidity, growth and other factors. The Adviser may sell a portfolio security due to changes in credit characteristics or outlook, as well as changes in portfolio strategy or cash flow needs. A portfolio security may also be sold and replaced with one that presents a better value or risk/reward profile. Except during periods of temporary defensive positioning, the Adviser generally expects to be fully-invested.
The Adviser aims to manage the Fund so as to provide investors with a higher degree of principal stability than is typically available in a portfolio of lower-rated longer-term, fixed-income investments The Adviser intends to invest the Fund’s assets in the securities of issuers in many different industries and intends to invest a maximum of 2-3% of the Fund’s assets in the securities of any one issuer, though the Fund is not restricted from maintaining positions of greater weight based upon the outlook for an issuer or during periods of relatively small asset levels of the Fund.
While the Adviser anticipates that the Fund will invest primarily in the securities of U.S.-domiciled companies, it may also invest in those of foreign companies in developed countries.
For the complete filing click: HERE