American Beacon Ionic Inflation Protection ETF (CPII)
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American Beacon Ionic Inflation Protection ETF Profile
| ARCA Exchange | US Country |
Overview
The fund is an actively managed exchange-traded fund (ETF) that focuses on investments related to U.S. inflation dynamics and interest rates. It aims to achieve its investment objective by investing primarily in inflation swaps, options on U.S. interest rates (swaptions), and U.S. Treasury Securities, which include U.S. Treasury Inflation-Protected Securities (TIPS). The fund operates under the principle of seeking inflation protection and income generation through a mix of direct securities and derivative instruments. It adheres to a strategy that allows up to 30% of its net assets to be invested in inflation swaps and swaptions under normal market conditions. This fund is classified as non-diversified, indicating it may invest a larger proportion of its assets in a smaller number of issuers than a diversified fund.
Products and Services
- Inflation Swaps
An instrument the fund invests in to hedge against inflation risk. Inflation swaps are derivative contracts through which two parties exchange cash flows: one linked to inflation rates and the other to a fixed rate. By investing up to 30% of its net assets in inflation swaps, the fund aims to protect its investments against the erosion of purchasing power caused by inflation.
- Options on U.S. Interest Rates (Swaptions)
These are options to enter into an interest rate swap. The fund utilizes swaptions to achieve flexibility in managing interest rate exposures. By having the right, but not the obligation, to enter into an interest rate swap at predetermined terms, the fund can strategically position itself to benefit from movements in U.S. interest rates.
- U.S. Treasury Securities
This includes a range of government securities issued by the United States Department of the Treasury. The fund invests in U.S. Treasury Securities, including U.S. Treasury Inflation-Protected Securities (TIPS), to gain exposure to risk-free assets, earn a stable income, and further hedge against inflation. TIPS, in particular, are designed to protect against inflation because their principal value adjusts based on changes in the inflation rate.
