Amplify launches first SOFR-linked ETF in partnership with Samsung

The Amplify Samsung SOFR ETF, which launched on Wednesday, is the first ETF to track SOFR, an overnight interbank lending rate that has been adopted as the US alternative to the now-defunct Libor measure for overnight borrowing costs.

The launch of this new fund aligns with growing interest in ultra-short-term fixed-income ETFs, as yields on various products across the fixed-income spectrum have reached multi-year highs following the Federal Reserve's aggressive interest rate hike phase. Amplify President Bill Belden stated that interest-focused products have only become a priority this year.

According to Matthew Bartolini, head of product research for State Street Global's SPDR Americas ETF division, inflows into money market and ultra-short-term products account for approximately 36% of all inflows into fixed-income ETFs this year. However, this category represents only 15% of all fixed-income ETF assets.

The new fund aims to provide investors with exposure to overnight lending rates. Due to their short-term nature, these rates are less sensitive to duration risk, where rate volatility risks reducing investors' income.

According to Amplify, the Amplify Samsung SOFR ETF currently provides a yield of approximately 5.32%. The company's fees will be 20 basis points. Bill Belden also announced that a large institutional investor provided 50 million dollars in seed capital for the new ETF, but did not disclose the investor's identity.

News Source: 12punto