An Actively Managed Low Duration Income Strategy
Okay, one last question, Lance, before you leave us. Over the past few years, some investors were disappointed by the lackluster performance of bond index funds, which weren't able to swiftly react to rapid changes in interest rates. The AAM SLC low duration income ETF NYSE: LOI takes a different approach because it's actively managed and can adapt. Can you tell us more about that?
Absolutely. LOI, as we've referred to it, is an actively managed fixed income product managed by the team at SLC management. This is an active team that has extensive background and track record of managing corporates and securitized assets. In fact, very similar to TIIV, the active manager behind LOI has a 10-plus year track record managing the strategy and other wrappers.
The performance has been fantastic, again outperforming its benchmark on a 1, 3, 5, 10, and since inception basis. So while this ETF has only been in the marketplace a year, the strategy that's underlying it has been a time-tested strategy managed by SLC.
The true benefit of LOI in this environment is for those investors that, unfortunately, with interest rates coming down, the free money, the high yield that investors can get in money markets or really short duration strategies might not be meeting their needs from an income standpoint. What LOI does is it sort of plays that middle ground where you may have cash to work or you want to take less duration risk out of the market.
Quite honestly, maybe you just want to increase your yield on the front end of the curve, and that's what LOI does. The team at SLC, they focus on securitized assets which, as most folks generally know, they are some sort of yield premium over traditional corporates or treasuries, and the team tries to capitalize on that.
At the core of LOI is a sort of a relative value nature where these portfolio managers can tactically rotate between sectors based off of market conditions and provide that yield premium that they may not otherwise get. So, at the end of the day, you're getting a well-rounded active managed low duration strategy that, think of it as sort of a core plus on the front end of the curve, one that can get sizable pick up and yield versus our low duration counterparts. And by the way, when it's only 15 basis points, it's one of the cheapest low duration securities or ETFs in the marketplace, and we think this is going to be a fantastic product given the current marketplace.
