AdvisorShares last week expanded its lineup of actively managed exchange-traded funds when it launched the AdvisorShares Sage Core Reserves ETF (HOLD), which is subadvised by Sage Advisory Services, an Austin, Texas-based asset manager with fortes in fixed income portfolio management and ETF strategies.

HOLD is the 19th actively managed ETF sponsored by AdvisorShares, a Bethesda, Md.-based ETF provider focused on active strategies.

The fund is a cash management tool aimed at preserving capital while maximizing income by investing in a wide range of fixed-income securities and U.S. dollar-denominated investment-grade debt securities.

As of the fund’s launch date, the portfolio’s top sector weightings were corporates (48 percent), U.S. Treasuries (24 percent) and asset-backed securities (13 percent).

The ETF’s average maturity is expected to be less than three years, a range that Sage believes gives it flexibility in generating yield and total return. The fund’s expected average duration is one year. Duration measures the sensitivity of a fixed-income security’s price to interest rate changes; the longer the duration, the more it’s impacted by rising interest rates.

HOLD joins seven other ETFs in Morningstar’s ultrashort bond category, including well-known offerings such as the iShares Floating Rate Bond (FLOT) fund and the Pimco Enhanced Short Maturity ETF (MINT). 

“The marketplace is looking for yield, but at what cost from a risk standpoint,” says Robert Smith, president and chief investment officer at Sage. “We want to have low daily price volatility and be able to add good risk-adjusted current return, or yield, relative to six-month or one-year T-bills, and to do that handsomely.”

HOLD’s expected return on investment is roughly 60 to 70 basis points, or 25 to 35 basis points net of its expense ratio of 35 basis points.

Sage manages nearly $11 billion in assets, including a major portion devoted to fixed-income solutions for institutional and individual clients. It also offers tactical ETF strategies covering both fixed income and equities. HOLD is Sage’s first effort to subadvise and actively manage a stand-alone ETF.

Smith says HOLD gives Sage a product that fits in the duration component of the yield curve occupied by money market funds, which was something previously missing from its fixed-income arsenal.