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Weitz Core Plus Bond and Weitz Multisector Bond ETFs in registration
The SEC filing may be a work in progress. While WCPNX's prospectus explicitly permits investments in unrated securities ("The Fund may invest up to 25% of its total assets in debt securities which are unrated or which are non-investment grade") the ETF's prospectus omits this ("The Core Plus Fund may invest up to 25% of its total assets in debt securities that are rated non-investment grade."_
And the ETF's SAI (which covers both the Multisector fund and the Core Plus fund) isn't clear whether investing in unrated securities is limited to the Multisector fund. Further it has verbiage about redemptions impacting sales of junk- and un-rated securities, which seems to be lifted from an OEF's SAI.
ETF's SAI:
Non-Investment Grade Securities ... Price changes for debt securities held by a Fund will not cause changes to the Fund’s cash income from those securities, but will be reflected in the net asset value of Multisector Fund shares. Therefore, the judgment of the Adviser may at times play a greater role in valuing lower-rated or unrated securities. It also may be more difficult during times of adverse market conditions to sell lower-rated or unrated securities, whether to meet redemption requests or to respond to changes in the market.
OEF's SAI:
Preferred Stock and Debt Securities ... Price changes for debt securities held by a Fund will not cause changes to the Fund’s cash income from those securities, but will be reflected in the net asset value of the Fund’s shares. Therefore, the judgment of Weitz Inc. may at times play a greater role in valuing lower-rated or unrated securities. It also may be more difficult during times of adverse market conditions to sell lower-rated or unrated securities, whether to meet redemption requests or to respond to changes in the market.
As to ETFs being more volatile, this relates to a post I made in another thread: looking at prices too frequently makes a fund appear more volatile. In many cases that's likely most of what you're seeing. That is, if one looks at the close-of-market prices of ETFs they are likely (nearly) as stable as those of OEFs.
All else being equal, I prefer OEFs for the absence of spread, the absence of SEC fees (de minimis), and the absence of premium/discount risk. But assuming the ETF version of Core Plus "exactly" tracks WCPNX, it is hard to argue against buying something that's 20 basis points cheaper. (To get the cheaper WCPBX, one must be able to pony up $1M.)
Comments
And the ETF's SAI (which covers both the Multisector fund and the Core Plus fund) isn't clear whether investing in unrated securities is limited to the Multisector fund. Further it has verbiage about redemptions impacting sales of junk- and un-rated securities, which seems to be lifted from an OEF's SAI.
ETF's SAI: OEF's SAI: As to ETFs being more volatile, this relates to a post I made in another thread: looking at prices too frequently makes a fund appear more volatile. In many cases that's likely most of what you're seeing. That is, if one looks at the close-of-market prices of ETFs they are likely (nearly) as stable as those of OEFs.
All else being equal, I prefer OEFs for the absence of spread, the absence of SEC fees (de minimis), and the absence of premium/discount risk. But assuming the ETF version of Core Plus "exactly" tracks WCPNX, it is hard to argue against buying something that's 20 basis points cheaper. (To get the cheaper WCPBX, one must be able to pony up $1M.)