PGIM Investments is expanding its exchange-traded fund (ETF) lineup with the launch of the PGIM Active Aggregate Bond ETF (NYSE Arca: PAB). PAB is an actively managed fixed income ETF seeking total return through a combination of current income and capital appreciation. PAB offers core fixed income exposure through a diversified portfolio of investment-grade bonds with an estimated total expense ratio of 0.19%.
“Given the current low-yield environment and potential for increased market volatility, there has been strong client demand for active fixed income solutions,” said Stuart Parker, president and CEO of PGIM Investments. “We are pleased to expand our line-up to include a low-cost active core bond ETF that offers alpha potential with effective risk management via PGIM Fixed Income, one of the largest and most experienced bond managers in the world.”
A Risk-Managed Approach to Active Investing
PGIM Investments’ suite of fixed income ETFs are managed by PGIM Fixed Income, one of the largest and most experienced global fixed income managers in the world, with more than $968 billion in assets under management.1 PGIM Fixed Income’s active investment approach is bolstered by credit research, quantitative research and risk management to help deliver competitive returns and manage volatility.
The PGIM Active Aggregate Bond ETF, managed by senior members of PGIM Fixed Income’s multi-sector team, Richard Piccirillo, Lindsay Rosner and Stewart Wong, includes investment restrictions on characteristics such as duration, quality and sectors in order to manage portfolio risks.
Why Active Fixed Income?
PGIM Investments recently conducted an analysis which found that historically, the majority of active fixed income managers have outperformed their passive peers with a better risk/return profile than the average passive manager. The analysis also found that the Bloomberg Barclays U.S. Aggregate Bond Index (the “Agg”) provides limited sector diversification for investors, as it is heavily weighted toward low-yielding U.S. government debt. While the PGIM Active Aggregate Bond ETF is benchmarked to the Agg, the ETF will seek to invest in a more broadly diversified portfolio across fixed income sectors, industries and issuers.
PGIM Fixed Income’s multi-sector team employs a collaborative bottom-up research-driven security selection process with an intense focus on industry and issuer credit research to extract multiple sources of alpha through active allocations across fixed income spread sectors.
Learn more about PGIM’s suite of actively managed ETFs.
ABOUT PGIM INVESTMENTS
PGIM Investments LLC and its affiliates offer more than 100 funds globally across a broad spectrum of asset classes and investment styles. All products draw on PGIM’s globally diversified investment platform that encompasses the expertise of managers across fixed income, equities and real estate.
ABOUT PGIM
PGIM, the global asset management business of Prudential Financial, Inc. (NYSE: PRU), ranks among the top 10 largest asset managers in the world2 with more than $1.5 trillion in assets under management as of December 31, 2020. With offices in 16 countries, PGIM’s businesses offer a range of investment solutions for retail and institutional investors around the world across a broad range of asset classes, including public fixed income, private fixed income, fundamental equity, quantitative equity, real estate and alternatives. For more information about PGIM, visit pgim.com.
Prudential’s additional businesses offer a variety of products and services, including life insurance, annuities and retirement-related services. For more information about Prudential, please visit news.prudential.com.
| 1 | As of Dec. 31, 2020. | |
| 2 | Prudential Financial, Inc. (PFI) is the 10th largest investment manager (out of 527 firms surveyed) in terms of global assets under management based on Pensions & Investments’ Top Money Managers list published on June 1, 2020. This ranking represents global assets under management by PFI as of March 31, 2020. |
Fund Risk Information
The Fund is an actively managed exchange traded fund (ETF) and, thus, does not seek to replicate the performance of a specified index. The Fund actively and frequently trades its portfolio securities which can result in high portfolio turnover and correspondingly greater transaction and brokerage costs. As an ETF, the Fund’s shares trade on an exchange and are subject to ETF shares trading risk, including that the Fund’s shares may trade at a premium or discount to net asset value; during periods may become less liquid; potentially may lack an active trading market, which may result in significant losses if you sell your shares of the Fund during these periods; and may be subject to authorized participant concentration risk, since the Fund has a limited number of intermediaries that act as authorized participants and none of these authorized participants are or will be obligated to engage in creation or redemption transactions. To the extent that these intermediaries exit the business or are unable to or choose not to proceed with creation and/or redemption orders with respect to the Fund and no other authorized participant creates or redeems, shares of the Fund may trade at a discount to NAV and possibly face trading halts and/or delisting. The Fund may be subject to the risk of increased expenses, meaning that your actual cost of investing in the Fund may be higher than the expense shown in the expense table, as well as the cost of buying or selling shares, since when you buy or sell shares of the Fund through a broker, you will likely incur brokerage commission or other charges; and cash transaction risk, which is the risk that the Fund (which may affect creation and redemptions in cash or partially in cash) may be less tax-efficient than an investment in an ETF that distributes portfolio securities in-kind. As a new and relatively small fund with limited operating history, the Fund is subject to the risk that its performance might not represent how it may perform long term and investments may have disproportionate impact on performance. Fixed income investments are subject to credit, market, and interest rate risks (including duration risk and prepayment risk), and their value will decline as interest rates rise; call and redemption risk, where the issuer may call a bond held by the Fund for redemption before it matures and the Fund may lose income; liquidity risk, which exists when particular investments are difficult to sell; emerging markets risk, which exposes the Fund to greater volatility and price declines. The Fund may invest in foreign securities, which generally involve more risk than investing in U.S. issuers, including political, legal, and economic uncertainty; structured products, which are subject to issuer repayment and counterparty risk; derivatives, which may carry market, credit, and liquidity risks; and mortgage-backed and asset-backed securities, which are subject to prepayment, extension, and interest rate risks. The Fund may be subject to management risk, where the value of your investment may decrease if judgments by the subadviser are incorrect; economic and markets event risk, meaning that events in global financial markets could result in high market volatility, market disruption and geopolitical risks, meaning that international wars or conflicts and geopolitical developments including terrorist attacks and outbreaks of infectious diseases could negatively impact interest rates, market volatility and security pricing, and market risk, where the value of investments may decrease and securities markets are volatile. U.S. government and agency securities and U.S. Treasury bills are backed by the full faith and credit of the U.S. government, are less volatile than equity investments, and provide a guaranteed return of principal at maturity. Large shareholders could subject the Fund to large scale redemption risk. Diversification does not assure a profit or protect against loss in declining markets. These risks may increase the Fund’s share price volatility. The risks associated with the Fund are more fully explained in the prospectus and summary prospectus. There is no guarantee the Fund’s objective will be achieved.
This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation. Clients seeking information regarding their particular investment needs should contact a financial professional.
Consider a fund’s investment objectives, risks, charges, and expenses carefully before investing. The prospectus and summary prospectus contain this and other information about the fund. Contact your financial professional for a prospectus and summary prospectus. Read them carefully before investing.
Funds are distributed by Prudential Investment Management Services LLC, a Prudential Financial company. PGIM Fixed Income is an affiliate of PGIM. © 2021 Prudential Financial, Inc. and its related entities. The PGIM logo is a service mark of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
Investment products are not insured by the FDIC or any federal government agency, may lose value, and are not a deposit of or guaranteed by any bank or any bank affiliate.
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Contacts:
973-902-2503
Kylie.scott@pgim.com
