GMO Systematic Investment Grade Credit ETF (INVG)

Overview

INVG is a fund designed to exceed the performance of the Bloomberg U.S. Corporate Index through a systematic multi-factor approach. Although it aims to maintain comparable exposures to its benchmark, the fund focuses on more liquid, investment-grade corporate bonds that have varying maturities, which may include securities issued by both U.S. and international companies. The fund employs a comprehensive analysis of numerous factors, such as value, quality, momentum, and fundamentals. This analysis is conducted through proprietary fair value models that assess default risk and market momentum. The fund's strategy is structured to seek attractive risk/return opportunities while also minimizing tracking error by effectively managing exposure across various dimensions, including country, sector, issuer, liquidity, interest rate, and credit spread risks. Being an actively managed fund, the portfolio manager retains complete discretion to adjust the portfolio whenever necessary. Additionally, INVG may allocate investments into derivatives and other ETFs, as well as U.S. Treasury and money market funds or instruments.

Products and Services

• Multi-Factor Approach: This involves analyzing a range of factors such as value, quality, momentum, and fundamentals to select investment-grade corporate bonds aimed at outperforming the benchmark index.
• Investment-Grade Corporate Bonds: The principal product focuses on acquiring highly liquid bonds with varying maturities issued by both domestic and international firms, ensuring a diverse portfolio with minimized risk.
• Proprietary Fair Value Models: Proprietary models are used to measure default risk and market momentum, allowing for informed decision-making and the identification of optimal investment opportunities.
• Active Portfolio Management: The fund’s portfolio manager has the authority to make adjustments to the portfolio at any time, ensuring it remains aligned with changing market conditions and investment objectives.
• Risk Management Strategies: Strategies are in place to limit tracking error through the careful management of exposure to country, sector, issuer, liquidity, interest rate, and credit spread risks, thereby enhancing stability and performance.
• Derivatives and ETFs: In addition to corporate bonds, the fund may also invest in various derivatives and exchange-traded funds (ETFs) to diversify risk and enhance returns.
• U.S. Treasury and Money Market Instruments: The fund has the option to allocate resources toward U.S. Treasury securities and money market funds to ensure liquidity and stability within the investment strategy.