Nomura Tax-Free USA ETF (LTAX)

Overview

LTAX is an actively managed investment fund that focuses on acquiring securities that are exempt from federal income tax, enhancing the appeal for investors seeking tax-efficient income. The fund primarily invests in municipal debt obligations issued by state and local governments, which serve crucial public purposes such as funding hospitals, schools, and various capital expenses. LTAX aims to maintain a dollar-weighted average effective maturity of between 5 to 30 years, striking a balance that optimizes risk and return. The fund may allocate up to 20% of its portfolio to high-yield debt securities, offering potential for enhanced returns. Income generated from the fund can fluctuate depending on interest rates and the overall composition of the portfolio. Additionally, LTAX has the flexibility to concentrate investments in specific municipal bond sectors when opportunities arise, particularly when there are limited supplies in other sectors.

Products and Services

• Municipal Debt Obligations

  LTAX invests primarily in various types of municipal debt, which includes advance refunded bonds, revenue bonds, and general obligation bonds. These municipal debt instruments are essential for financing community projects and services, creating a stable source of income for the fund while supporting public infrastructure.

• Insured Municipal Bonds

  These bonds come with insurance that protects investors against default. LTAX includes insured municipal bonds in its portfolio to enhance security and reduce investment risk, thus guaranteeing that bondholders receive interest payments even in challenging economic conditions.

• Private Activity Bonds

  Private activity bonds are issued to finance projects that receive significant private involvement, such as those beneficial to the public welfare. LTAX utilizes these bonds to diversify its portfolio while funding important public projects.

• Municipal Leases

  LTAX may invest in municipal leases, which allow state and local governments to acquire equipment or property without using upfront capital. This type of investment can provide regular income streams while ensuring that critical municipal services and infrastructure are maintained.

• Certificates of Participation

  These certificates represent a share in a lease-financing agreement, providing income from lease payments made by municipalities. LTAX includes certificates of participation to enhance income stability and capture opportunities in municipal financing.