MutualFundWire.com: A $725B-AUM AM's ETF Team Targets Securitized Income

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Friday, May 31, 2024

A $725B-AUM AM's ETF Team Targets Securitized Income

The folks at a $725-billion-AUM (as of March 31) asset manager's ETF unit are partnering with a sister boutique to roll out a fund that focuses on generating income from securitized assets. To do so, they're transforming a five-year-old strategy.

Neil Moriarty, III
MacKay Shields
Co-Head of the Global Fixed Income Team, Senior Managing Director, Senior Portfolio Manager

This morning, Neil Moriarty, senior managing director and co-head of the global fixed income team at MacKay Shields LLC, and Kirk Lehneis, chief operating officer of New York Life Investment Management [profile] and president of IndexIQ ETFs, unveiled the launch of the IQ MacKay Securitized Income ETF (SECR on the NYSE Arca). IndexIQ and MacKay Shields are both part of New York Life Investments, the asset management arm of New York Life Insurance Company.

SECR's inception date is today (i.e. May 31), and it comes with an expense ratio of 40 basis points (which bakes in a 31bps fee waiver). The new ETF is a series of IndexIQ Active ETF Trust, and its starting AUM is $25.4 million, thanks to the conversion of a predecessor separately managed account (SMA) that debuted on October 1, 2019.

MacKay Shields, which powered the predecessor SMA, now serves as subadvisor of SECR, and IndexIQ Advisors LLC serves as investment advisor. The new fund's PM team includes three MacKay Shields executives: Zachary Arons, director and structured products credit analyst; Michael DePalma, senior managing director and co-head of the global fixed income team; and Moriarty.

Moriarty contrasts SECR's approach with the "allocations to securitized debt closely aligned with the Bloomberg Aggregate Index," allocations he sees in "most 'core' and 'core plus' fixed income strategies."

"With an actively managed approach overseen by the highly experienced portfolio managers on MacKay's Global Fixed Income Team, SECR seeks a diversified source of potential outperformance and enhanced risk-adjusted return potential," Moriarty states. "If we are in fact in a 'higher for longer' rate environment, an approach that underpins SECR can be a very powerful tool for income-focused investors and advisors."

Lehneis puts the launch of SECR in the context of IndexIQ's efforts "to further develop the lineup of active ETFs managed by the industry-leading income experts at MacKay Shields."

"This fund and so many others in our innovative lineup align with our commitment to delivering thoughtful solutions that meet the evolving needs of investors," Lehneis states.

SECR's other services providers include: SS&C's Alps Distributors, Inc. as distributor; the Bank of New York Mellon (BNY Mellon) as administrator, custodian, dividend paying agent, securities lending agent, and transfer agent; Chapman and Cutler LLP as counsel; and PricewaterhouseCoopers LLP as independent accounting firm.

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