ETF Spotlight: PGIM Ultra Short Bond ETF [PULS]
By: Ted Black, CFP©
Winter 2025 (Vol. 42, No. 4)
Most investors have the need or desire to allocate at least a portion of their portfolio in low or no risk investments such as CDs, savings accounts and money markets. Whether it’s important to have ready access to funds in the short-term or used to help minimize risk and volatility, this asset class can play an important role in an investor’s portfolio.
Following the financial crisis of 2008-2009, the Federal Reserve Board (the Fed) lowered rates dramatically and kept short term rates near zero from 2009 through the end of 2015. Then after a short bout of rising rates, the Covid pandemic led the Fed to drop rates to near zero once again. I mention all this to remind us that for many years this important asset class was not very rewarding to investors. CD and money market rates ranged from less than 1% to 2.5% for much of that time.
Then came inflation. In its multi-year effort to tame inflation, the Fed raised rates aggressively in a relatively short time frame bringing short term rates from near zero to well over 5%. This was a welcome reprieve, particularly for risk averse and retired investors who suffered many years of very low returns in these types of investments.
For those looking to maintain a high degree of safety yet earn a higher yield offered by CDs or money markets, ultra short bond funds such as the PGIM Ultra Short Bond ETF (PULS) may be a solid choice. As its name implies, PULS invest only in very short-term bonds, which are much less sensitive to changes in interest rates than their longer-term siblings.
This fund has over $9 billion in assets under management, with all of its holdings rated investment grade. The fund is managed by PGIM Fixed Income which has 130 portfolio managers, 151 credit research analysts, 74 quantitative and risk analysts and over $850 billion under management.
As of the close of 2024, just over half of the fund’s holdings come from the following categories:
- Corporate Bonds - Issued by companies rated investment grade, these debt instruments have varying levels of risk and return, influenced by the financial health of the issuing corporation.
- Asset-Backed Securities - These investment grade securities are supported by a collection of loans, leases, or other financial assets, excluding those tied to real estate or mortgages.
This fund pays its dividend on a monthly basis and as of 12/27/2024 its distribution yield was 5.14%.
Performance annualized and updated through 12/31/2024:
1-Year: +6.10%; 3-Year: +4.61%; 5-Year: +3.15%.
The gross annual expense ratio is 0.15%.
If you’re interested in this fund, or would like a portfolio review to determine if this fund might be an appropriate addition to your portfolio, please call Ted Black, CFP© at 888-878-0001, extension 3.
Statistics and information provided by Morningstar and PGIM Investments. Please visit the PGIM Investments website at www.PGIM.com for the most recent performance information. The principal value and investment return will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns shown, unless otherwise indicated, are total returns, including any capital gains or losses and all dividend and capital gains distributions. The performance data quoted represents past performance and in no way guarantees future results. Mutual funds and Exchange Traded Funds (ETFs) are not FDIC insured.
Mutual funds and ETFs are sold by prospectus. An investor should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus contains this and other information about the investment company. Please contact our office at 888-878-0001 to obtain a prospectus. Please read the prospectus carefully before you invest or send money.
Advisory services offered through Royal Palm Investment Advisors, Inc., a Registered Investment Advisor.