Today in “massive administrative and accounting costs” news, peer to peer lender Sofi has announced they have unleashed the market’s first “weekly income” ETF that provides distributions once a week.
The actively managed SoFi Weekly Income ETF will trade under the ticker “TGIF” and has an expense ratio of 0.59%. It has listed on the NYSE Arca. The fund’s strategy is to invest in both investment-grade and high-yield debt with a duration of less than three years. The ETF will pay out weekly with a “larger” payout toward the end of the year, ETF.com says.
This is normally where we would make a junk bond joke and note that the economy is in a deep recession that it likely won’t be out of in three years – but the Fed is backstopping the entire corporate bond market at this point, so we won’t.
For comparison, most Vanguard low cost ETFs and other basic ETFs have an expense ratio of 0.10%. This means for every $1,000 an investor throws into the ETF, they will pay $5.90 per year, instead of $1.00 per year.
We’re guessing all that extra money goes to paying the ETF’s accounting team – and probably going to offset all the poorly performing “peer to peer” loans the company wildly offered to any willing participant while it was getting its start.
The company says it is targeting a younger demographic with its weekly payout, stating that the product could provide both “immediate rewards” while encouraging long-term holding.
Sofi’s other ETF, SFY, has about $111 million in assets under management currently.
LAUNCHING TODAY: $TGIF, the SoFi Weekly Income ETF, which (I think) is the first-ever bond ETF to distribute income on a weekly basis (hence the ticker) instead of monthly. Actively mgd, will hold IG and HY. Fee is 59bps. pic.twitter.com/PHEDJKuEt8
— Eric Balchunas (@EricBalchunas) October 2, 2020