WisdomTree Launches New Unconstrained Bond ETF

WisdomTree Investments today announced the launch of a new actively-managed bond ETF designed to seek out broad exposure to the global fixed-income marketplace.

The WisdomTree Western Asset Unconstrained Bond Fund UBND is intended to seek out total return opportunities, regardless of the interest rate and credit environments. The “unconstrained” moniker denotes the ETFs ability to capitalize on income strategies across nearly any sector of the bond market.

The fund manager, Western Asset Management Company, will emphasize core-risk-management practices within UBND that will target low volatility, emphasis on value and potentially higher yield than traditional core bond funds.

Additionally, Mark Lindbloom, the UBND portfolio manager, was recently named the Morningstar Fixed Income Fund Manager of the Year for 2014.

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A Closer Look At UBND

The UBND expense ratio is currently 0.55 percent, which is in line with top actively managed funds, such as the PIMCO Total Return ETF (PIMCO ETF Trust BOND) and SPDR DoubleLine Total Return Tactical ETF TOTL. Income investors considering a non-traditional approach to the bond market will now have an additional choice to consider when comparing these options.

Rick Harper, WisdomTree Head of Fixed Income & Currency, noted in the press release that "UBND seeks to provide exposure to the desirable characteristics of fixed income – income potential, diversification and risk reduction – while avoiding the undesirable – segments of bond markets with overvalued securities and unattractive risk return tradeoffs."

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Looking Forward

It should be noted that UBND may not experience similar price action as a traditional bond index such as the Vanguard Total Bond Market ETF BND. The "go anywhere, do anything" flexibility built in to the UBND structure allows for unconventional strategies such as betting on rising interest rates.

Investors in this fund will rely on the manager’s expertise in security selection, yield curve positioning and overall global outlook. As a result, UBND will likely carve out a unique niche within the fixed-income marketplace as it attempts to focus on value and opportunity, rather than a strict market-cap weighted benchmark.

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