Schwab Asset Management has announced the upcoming launch of its first actively managed fixed income ETF, the Schwab Ultra-Short Income ETF (SCUS US), which will begin trading on NYSE Arca on 13 August.
Schwab Asset Management is set to introduce its first actively managed fixed income ETF.
The ETF aims to provide current income while preserving capital and maintaining liquidity by investing in a diversified portfolio of investment-grade, short-term, US dollar-denominated debt securities issued by both US and foreign entities.
The portfolio will have a duration of one year or less, including various types of securities such as commercial paper, promissory notes, certificates of deposit, variable- and floating-rate debt securities, corporate and municipal bonds, bank notes, repurchase agreements, and US government obligations, including those from Fannie Mae and Freddie Mac.
In times of unusual market conditions, the fund may temporarily invest up to 100% of its assets in cash or other high-quality short-term investments.
The fund leverages Schwab’s extensive credit research and professional money management to achieve its investment objectives.
The ETF is designed to serve as a core component of a diversified investment portfolio, offering investors a relatively low-cost option for accessing the short-term bond market.
By focusing on high-quality debt securities, the fund seeks to deliver steady income with minimal interest rate risk, making it suitable for investors looking to preserve capital while earning modest returns.
David Lafferty, Director, Product Strategy & Development, Schwab Asset Management, commented: “The Schwab Ultra-Short Income ETF is a notable addition to the Schwab family of ETFs as investors continue to seek out cost-effective, income-producing strategies to help diversify their portfolios. With SCUS, the first actively managed offering in our fixed income ETF lineup, we believe investors will benefit from our extensive credit research and portfolio management teams, along with the inherent features of an ETF.”
SCUS will come with an expense ratio of just 0.14%, notably below the industry average of 0.25% for similar funds and four basis points cheaper than its largest competitor, the $25 billion JPMorgan Ultra-Short Income ETF (JPST US).