- The Ultra Short-Term Bond Fund fills the gap between money market funds and traditional short-term bond funds in terms of a risk/reward tradeoff.
- The fund takes on slightly more credit and interest rate risk than money market funds with greater return potential. Unlike money market funds but similar to other bond funds, its net asset value can increase or decrease as interest rates change, with the potential for principal gains or losses. At the same time, the fund will be managed with an eye toward reducing risks if rates rise.
- The Ultra Short-Term Bond Fund will invest in a highly diversified portfolio of shorter-term investment-grade corporate and government securities, including mortgage- and asset-backed securities, money market securities, and bank obligations.
- The new fund will invest in securities with an approximate average maturity of 1.5 years or less, with a broader credit spectrum that includes any investment-grade security rated BBB or better. By contrast, most money market fund investments tend to have average maturities of three months or less and are typically rated AA or better.
- The bond fund will offer similar flexibility to the firm's money market products, allowing for check writing capabilities and no trading restrictions.
- The fund is managed by Joseph K. Lynagh, who currently manages the firm's taxable and municipal money market portfolios and other cash investments. Mr. Lynagh has 18 years of investment experience, all of which have been with T. Rowe Price.
- Mr. Lynagh discusses his fund approach in this video .
- The net expense ratio for the fund is estimated to be 0.35% .
- The minimum initial investment in the Ultra Short-Term Bond Fund is $2,500 or $1,000 for retirement plans or gifts or transfers to minors (UGMA/UTMA) accounts.
T. Rowe Price Launches Ultra Short-Term Bond Fund
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