Seeking Yield Potential, Managing Risk
Some professional investors use short-term fixed income ETFs to try to gain additional yield, over and above what a money market or certificate of deposit (CD) might produce. Although the yield difference can be significant, it requires that investors be comfortable taking on more risk. Strategies like the Natixis Loomis Sayles Short Duration Income ETF (LSST) seeks to manage risk by investing in bonds that are close to maturity, typically within 2 years. This may potentially provide protection in the event that interest rates rise quickly, which would likely cause bonds with longer-dated maturities to suffer greater price drops. Additionally, some of these short duration fixed income products, including LSST, manage risk by seeking to invest in high quality bonds, rather than high-yield bonds.
Some professional investors use short duration fixed income ETFs as a way to tactically manage their fixed income risk. For example, in what they view as a risk-off market for bonds, these investors may add more short duration fixed income and reduce their weights in standard bond ETFs. In risk-on markets, they can reverse course.
Potential Benefits of LSST
The LSST short-duration fixed income strategy is managed by the well-regarded fixed income portfolio management team at Loomis, Sayles & Company. What’s more, the strategy is actively managed as opposed to passively managed, so the investment team is able to adjust the portfolio to protect investors from obvious risks, and to alert them to potential opportunities. Lastly, LSST is aggressively priced in relation to its market peers, which can allow for more of the alpha generated by the investment team to be enjoyed by investors.
For more information about LSST and actively-managed ETF strategies from Natixis, contact your Natixis representative.
Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over some period.
All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, money market and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.
The views and opinions expressed may change based on market and other conditions. This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary.
Unlike passive investments, there are no indexes that an active investment attempts to track or replicate. Thus, the ability of an active investment to achieve its objectives will depend on the effectiveness of the investment manager.
Diversification does not guarantee a profit or protect against a loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Asset allocation does not ensure a profit or protect against loss.
ETF General Risk:
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 Risk:
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 Securities Risk:
Below investment grade fixed income securities may be subject to greater risks (including the risk of default) than other fixed income securities.
Foreign and Emerging Market Securities Risk:
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:
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.
Before investing, consider the fund's investment objectives, risks, charges, and expenses. Visit im.natixis.com for a prospectus or a summary prospectus containing this and other information. Read it carefully.
ALPS Distributors, Inc. is the distributor of the Natixis Loomis Sayles Short Duration Income ETF. Natixis Distribution, L.P. is a marketing agent. ALPS Distributors, Inc. is not affiliated with Natixis Distribution, L.P.
Natixis Distribution, L.P. (fund distributor, member FINRA|SIPC) and Loomis, Sayles & Company L.P. are affiliated.