AB Converts Short Duration Mutual Funds Into ETFs

On Monday, AllianceBernstein completed the conversion of two of its actively managed mutual funds into ETFs. The AB Short Duration Income ETF (NYSE Arca: SDFI) and AB Short Duration High Yield ETF (NYSE Arca: SYFI) have expense ratios of 0.30% and 0.40%, respectively.

"Today’s launch demonstrates AB's robust global fixed income business, adding additional building blocks for efficient income,” Scott DiMaggio, head of fixed income at AB noted.

“These conversion products offer a wrapper that is investment-model friendly, and we believe they will ultimately fit into client portfolios in multiple economic cycles,” he added.

2 Angles on Short Duration Fixed Income

SDFI's fixed-income portfolio aims for a dollar-weighted average duration of three years. The fund selects its portfolio using criteria like credit quality and how sensitive the securities are to interest rates. It has $101.2 million in assets under management currently and first became available as a mutual fund in 2018.

Meanwhile, SYFI targets the junk bond space and a dollar-weighted average duration of four years. The AllianceBernstein website notes that SYFI has steered away from 75% of the defaults within the domestic high-yield space. The fund's prospectus says it can invest in both foreign and domestic securities. It also looks to exploit inefficiencies in the bond market using a wide range of data. Meanwhile, the fund's objective is to maximize the income it provides investors. With an inception dating back to 2011, SYFI has $676.2 million in assets under management.