Active, Short Duration Fixed Income ETF for Shifting Markets
Actively Pursuing Value in Short Duration Fixed Income Funds
At the 5-year mark, the actively managed short duration fixed income ETF, LSST, may offer compelling opportunities in shifting market conditions.
The Natixis Loomis Sayles Short Duration Income ETF (LSST) celebrated its fifth anniversary in late December 2022 and has outperformed its benchmark since inception.
An Active, Team Effort
LSST is an actively managed ETF with a tenured and experienced portfolio management team at the helm. The team incorporates various bottom-up and top-down inputs to the investment process, many of which are proprietary in nature. Rather than purchase broad baskets of credit risk, the team individually selects each security based on their proprietary view of value.
Risk Focused
LSST has achieved strong performance through its robust proprietary risk management and its repeatable investment philosophy and process. As valuations change with credit conditions, an active approach potentially limits downdrafts when credit conditions deteriorate and captures value as spreads compress after flights to quality.
A Portfolio Building Block
LSST can be an attractive holding for investors who seek to limit or reduce the interest rate risk of their existing fixed income holdings. LSST is primarily investment grade by design and actively managed over market cycles. The strategy’s investment grade focus allows it to offer a yield advantage over short-dated, risk-free assets, while not sacrificing liquidity by utilizing large amounts of below-investment grade risk or assets from illiquid markets.
Average Annualized Total Returns (%) as of 12/31/22*
| 3 Months | YTD | 1 Year | 3 Year | 5 Year | Since Inception (12/28/2017) | |
|---|---|---|---|---|---|---|
| NAV | 1.29 | -3.60 | -3.60 | 0.49 | 1.57 | 1.58 |
| Market Price | 1.50 | -3.36 | -3.36 | 0.56 | 1.60 | 1.62 |
| Bloomberg U.S. Government/Credit 1-3 Year Bond Index |
0.89 | -3.69 | -3.69 | -0.32 | 0.92 | 0.92 |
Morningstar Ratings and Rankings (as of 12/31/2022)
| Short-Term Bond Category | Overall (539 funds) | 3 Years (539 funds) | 5 Years (479 funds) |
|---|---|---|---|
| Morningstar Rating (based on risk-adjusted returns) |
 |
|
|
| Percentile | N/A | 10th | 11th |
| Ranking (Fund rank/# of funds in category) |
N/A | 41 out of 539 | 31 out of 479 |
Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results. Investment return and value will vary, and you may have a gain or loss when shares are sold. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than quoted. For most recent month-end performance, visit www.im.natixis.com.
Performance for other share classes will be greater or less than shown based on differences in fees and sales charges. Performance for periods less than one year is cumulative, not annualized. Returns reflect changes in share price and reinvestment of dividends and capital gains, if any. Gross expense ratio 0.93%. Net expense ratio 0.38%. As of the most recent prospectus, the investment advisor has contractually agreed to waive fees and/or reimburse expenses (with certain exceptions) once the expense cap of the fund has been exceeded. This arrangement is set to expire on 4/30/2025. When an expense cap has not been exceeded, gross and net expense ratios may be the same.
The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating / 40% three-year rating for 60-119 months of total returns, and 50% 10-year rating / 30% five-year rating / 20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Past performance is no guarantee of future results.
Morningstar rankings for the Natixis Loomis Sayles Short Duration Income ETF in the Short-Term Bond Category are as of 12/31/2022. The fund’s total return percentile rank for the specified time period is relative to all funds that have the same Morningstar category. The highest (or most favorable) percentile rank is 1, and the lowest (or least favorable) percentile rank is 100. Rankings are subject to change monthly. Morningstar rankings do not include the effect of sales charges.
© 2022 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed above may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted. Actual results may vary.
IMPORTANT INFORMATION
1 Diversification does not protect against loss.
Risks:
Exchange-Traded Funds (ETFs) trade like stocks, are subject to investment risk, and will fluctuate in market value. Unlike mutual funds, ETF shares are not individually redeemable directly with the Fund and are bought and sold on the secondary market at market price, which may be higher or lower than the ETF's net asset value (NAV). Transactions in shares of ETFs will result in brokerage commissions, which will reduce returns. Unlike typical exchange-traded funds, there are no indexes that the Fund attempts to track or replicate. Thus, the ability of the Fund to achieve its objectives will depend on the effectiveness of the portfolio manager. There is no assurance that the investment process will consistently lead to successful investing.
Fixed income securities may carry one or more of the following risks: credit, interest rate (as interest rates rise bond prices usually fall), inflation and liquidity.
Below-investment grade (high yield) fixed income securities may be subject to greater risks (including the risk of default) than other fixed income securities. Foreign and emerging market securities may be subject to greater political, economic, environmental, credit, currency and information risks.
Foreign securities may be subject to higher volatility than US securities, due to varying degrees of regulation and limited liquidity. These risks are magnified in emerging markets.
Interest rate risk is a major risk to all bondholders. As rates rise, existing bonds that offer a lower rate of return decline in value because newly issued bonds that pay higher rates are more attractive to investors.
Definitions:
Basis points, otherwise known as “bps,” are a unit of measure often used to describe the percentage change in the value of an investment. One basis point is the equivalent to 0.01% or 0.0001 in decimal form.
Option-adjusted spread (OAS) is the measurement of the spread of a fixed-income security rate and the risk-free rate of return, which is then adjusted to take into account an embedded option. Typically, an analyst uses Treasury yields for the risk-free rate.
Yield to worst is a measure of the lowest possible yield that can be received on a bond that fully operates within the terms of its contract without defaulting. A mortgage-backed security (MBS) is an investment similar to a bond that is made up of a bundle of home loans bought from the banks that issued them. A collateralized mortgage obligation, or CMO, is a type of MBS in which mortgages are bundled together and sold as one investment, ordered by maturity and level of risk.
An asset-backed security (ABS) is a type of financial investment that is collateralized by an underlying pool of assets — usually ones that generate a cash flow from debt, such as loans, leases, credit card balances, or receivables.
Front-end corporates refer to short-term securities that will mature in the near term, usually in one year or less. They're the most sensitive to interest rate moves.
The Bloomberg U.S. Government/Credit 1-3 Year Bond Index is an unmanaged index which is a component of the U.S. Government/Credit Bond Index, which includes Treasury and agency securities (U.S. Government Bond Index) and publicly issued U.S. corporate and foreign debentures and secured notes (U.S. Credit Bond Index). The bonds in the index are investment grade with a maturity between one and three years. You may not invest directly in an index.
ALPS Distributors, Inc. is the distributor of the Natixis Loomis Sayles Short Duration Income ETF. Natixis Distribution, LLC is a marketing agent. ALPS Distributors, Inc. is not affiliated with Natixis Distribution, LLC.
Natixis Distribution, LLC is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.
Natixis Distribution, LLC is located at 888 Boylston Street, Suite 800, Boston, MA 02199. • 800-862-4863 • im.natixis.com
Natixis Distribution, LLC (fund distributor, member FINRA | SIPC) and Loomis, Sayles & Company, L.P. are affiliated.
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