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Revolutionize Your Portfolio with PTAM's New Short-Term Bond ETF - A Strategic Game-Changer


Michael Chen

April 9, 2024 - 15:21 pm


PT Asset Management Introduces Innovative Short-Term Bond ETF for Versatile Markets

CHICAGO, April 9, 2024 - PT Asset Management, LLC (PTAM), the distinguished boutique fixed income asset management firm commanding an impressive $7.7 billion in assets under management, today proudly introduced its first exchange-traded fund (ETF), the Performance Trust Short Term Bond ETF (STBF), commencing trading on the CBOE. With a solid foundation of over fifteen years in managing fixed income strategies, PTAM is venturing into the ETF market, poised to present investors with a diversified, actively managed short-term bond strategy robust enough to flourish across a variety of market circumstances.

PTAM leverages its unique proprietary investment approach known as Shape Management, cultivating a strong reputation for challenging typical bond metrics and steering clear of macroeconomic speculations. Shape Management embodies a rigorous, repeatable mathematical process dedicated to scrutinizing the risk-return profile associated with the future cash flows of a bond. PTAM’s cutting-edge strategy aims to furnish investors with an avant-garde fixed income solution, designed to consistently generate excess returns irrespective of where interest rates stand.

The inaugural STBF proffers an eclectic portfolio curated to excel across various market conditions without a heavy reliance on interest rates. A tweet promoting STBF—citing its market resilience—encourages readers to share the sentiment, highlighting the versatility of the fund (Share STBF's Market Resilience).

Sean Dranfield, CEO & Principal of PTAM, expressed his excitement over the ETF launch, stating, "The introduction of STBF symbolizes a significant leap for PTAM, signifying our dedication to the continual innovation in fixed income investment. We are exhilarated to offer our proprietary Shape Management technique in a format favored by investors—a tax-efficient ETF vehicle."

STBF stands out with a meticulously assembled underlying portfolio, crafted to deliver robust returns in a variety of market scenarios while predominantly retaining high credit quality. "Conventional short-term bond funds often leave investors yearning for more. Our novel ETF circumvents this issue through its diversified portfolio encompassing the breadth of the fixed income sectors, including Collateralized Loan Obligations (CLOs), Automobile Asset-Backed Securities (Auto ABS), Municipals, and Commercial Mortgage-Backed Securities (CMBS),” said Taylor Huffman, CFA, Client Portfolio Manager at PTAM.

Huffman further accentuates the mathematically inclined approach to portfolio construction combined with proactive management, attributing this to the seasoned professionals at PTAM who have weathered preceding credit cycles and whose expertise lends them the ability to pinpoint pricing and structural market inefficiencies. Stressing the current yield curve landscape and investor anxiety surrounding imminent interest rate fluctuations and unpredictability, Huffman reinforced the notion that STBF serves as an invaluable asset to augment existing investment portfolios.

For additional insights into STBF and the expertise behind PT Asset Management, interested parties are encouraged to visit PTAM’s website.

Comprehensive Investigation into PTAM's Approach

PTAM derives its strength from being a specialized entity based in Chicago, focused on fixed-income asset management with a distinctive approach that is largely indifferent to interest-rate changes. This unique methodology has been cultivated to consistently deliver outstanding long-term performances across various market conditions. As of March 31, 2024, PTAM expertly managed $7.7 billion in assets through an array of offerings including mutual funds and separately managed accounts tailored for institutional investors.

Investment Considerations and Risks

The Fund's investment goals, potential risks, and costs demand careful evaluation by investors. The summary and complete prospectuses hold critical information pertaining to the investment company and can be requested by calling 1.877.738.9095—a crucial read prior to making investment decisions.

Investment comes with inherent risk including the potential loss of principal. Fixed-income securities within the Fund are susceptible to a variety of risks such as interest rate risk, repayment before maturity (call risk), early settlement (prepayment) and extension risk, creditworthiness (credit risk), and trading liquidity (liquidity risk). The possibility that rates may climb signifies a predicted dip in the value of the fixed-income securities residing in the Fund. Should an issuer fail to make timely principal and interest payments, the repercussions would be significant. High-yielding bonds may be prematurely repaid by the issuer, which could potentially occur before the maturity dates.

Fixed-income securities subject to early repayment show limited potential for gain in a falling interest rate environment and the same if not greater risk of depreciation during a rising interest rate landscape. Some fixed-income securities may experience scant trading opportunities, further complicating the endeavour to sell or procure a security at an accommodating price or point in time. Beyond the customary risks bound to fixed-income securities, Collateralized Debt Obligations (CDOs) and Collateralized Loan Obligations (CLOs) bring forth additional concerns, such as insufficient distributions from the underlying collateral to cover interest or other payments, and the possibility of the collateral decreasing in value or defaulting.

The Fund engages in CDOs and CLOs that may rank subordinate to other classes. Their values can swing wildly, and unexpected investment outcomes could surface from disputes with the issuer. High-yield fixed-income securities known as "junk bonds" are rated below investment grade by Nationwide Recognised Statistical Rating Organisations (NRSRO). Despite generally providing higher interest rates compared to their higher-rated counterparts, junk bonds carry a more considerable risk of loss in both income and principal and are more susceptible to default.

Residential Mortgage-Backed Securities (RMBS) are not immune to the general risks of fixed-income securities and mortgage-backed securities. Credit concerns surrounding RMBS sprout from potential losses due to tardy payments or total defaults by borrowers on the underlying mortgages. The frequency and scope of these late or foregone payments and the consequent losses hinge on factors such as the economic climate, the equity level of the borrower in the mortgaged property, and individual financial circumstances of borrowers.

The Fund's strategies involving derivatives may induce unexpected losses as a result of unforeseen market effects on the derivative's value or if the derivatives perform beneath expectations or do not correlate with the performance of other investments they aim to hedge. Because the application of derivative instruments regularly creates economic leverage, the Fund's derivative investments could expose assets greater in value than the securities present in the Fund's portfolio. Engaging in derivative instruments come with risks different from, and possibly surpassing, the risks of investing directly in securities and other traditional investment avenues.

ETF Investment Dynamics

Investors should note that ETF shares are bought and sold at market price (not NAV) and may trade at a discount or premium to NAV, without being individually redeemable from the funds. It is important to acknowledge that brokerage commissions will diminish returns.

PT Asset Management, LLC ("PTAM") is the advisory authority of the PTAM Funds, which are distributed by Foreside Fund Services, LLC ("Foreside"). PTAM and Foreside are independent entities, operating without affiliation.

PTAM's innovative approach and the introduction of STBF is a testament to PTAM's ongoing commitment to providing groundbreaking investment solutions. The active management and strong foundation that STAM brings offer investors unique opportunities in the evolving marketplace.

For further information, please see the official press release from PT Asset Management: PTAM Launches Short-Term Bond ETF - STBF.

In conclusion, PTAM's insight into the financial landscape along with their breakthrough ETF, STBF, aims to redefine the archetype for short-term investments, ensuring investors a secure and dynamic vehicle for their capital.