PGIM Introduces Two Active Muni ETFs

Business Wire 28-Jun-2024 8:47 AM

New fixed income ETFs build on success of $7B PGIM Ultra Short Bond ETF (PULS) and PGIM's existing retail municipal bond strategies¹

PGIM,² the $1.34 trillion global investment management business of Prudential Financial, Inc. ((PRU), has launched two new actively managed exchange-traded funds (ETFs) — the PGIM Ultra Short Municipal Bond ETF (PUSH) and the PGIM Municipal Income Opportunities ETF (PMIO) — on the NYSE Arca.

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Stuart Parker, President and CEO, PGIM Investments (Photo: Business Wire)

Both ETFs seek total return through a combination of current income and capital appreciation by investing at least 80% of their respective portfolios in municipal ("muni") obligations whose income is exempt from federal income taxes. The ETFs are subadvised by PGIM Fixed Income, a top-10 U.S. active fixed income manager with $821 billion in assets under management.³

"In addition to their diversification benefits, muni bond ETFs offer an attractive opportunity for investors, particularly high-net-worth investors, who may be looking to maximize tax efficiency within their portfolios," said Stuart Parker, president and CEO of PGIM Investments. "We are thrilled to further expand PGIM Fixed Income's actively managed muni bond offerings in the retail market."

Jason Appleson, PGIM Fixed Income head of Municipal Bonds and co-portfolio manager of the new ETFs, comments, "These new products allow ETF investors to tap into PGIM Fixed Income's muni expertise. The PGIM Ultra Short Municipal Bond ETF (PUSH) is ideal for investors looking to deploy cash into a more conservative strategy while benefiting from tax efficiencies provided by the municipal markets. The PGIM Municipal Income Opportunities ETF (PMIO) is designed to have more credit and duration risk flexibility, allowing us to select opportunities within the muni market."

PGIM Ultra Short Municipal Bond ETF (PUSH)

PUSH is PGIM's second ultra short ETF strategy, following the success of the $7 billion PGIM Ultra Short Bond ETF (PULS), and offering an additional alternative to traditional cash management strategies. The ETF seeks to primarily invest in investment-grade muni bonds and up to 10% in high yield muni debt obligations. PUSH seeks to maintain a weighted average portfolio duration of two years or less.

With a 0.15% net expense ratio, PUSH is the lowest-cost active ETF in the Morningstar Short Muni category.⁴

PGIM Municipal Income Opportunities ETF (PMIO)

PMIO is a dynamic income opportunities strategy, investing at least 70% of its portfolio in investment-grade muni debt obligations and up to 30% in high yield muni debt obligations. The ETF seeks to maintain a weighted average portfolio duration of two to eight years. PGIM's flexible approach allows the ETF to allocate across credit qualities, maturities, sectors and states based on where the portfolio management team sees what it believes to be the most attractive opportunities. PMIO has a net expense ratio of 0.25%.

Learn more about PGIM's suite of 42 ETFs which spans fixed income, equity, and multi-asset class solutions.

ABOUT PGIM INVESTMENTS PGIM Investments LLC and its affiliates offer more than 100 funds globally across a broad spectrum of asset classes and investment styles. All products draw on PGIM's globally diversified investment platform that encompasses the expertise of managers across fixed income, equities, alternatives, and real estate.

ABOUT PGIM FIXED INCOME PGIM Fixed Income, with $821 billion in assets under management as of March 31, 2024, is a global asset manager offering active solutions across all fixed income markets. The company has offices in Newark, N.J., London, Amsterdam, Zurich, Munich, Singapore, Hong Kong, and Tokyo. For more information, visit pgimfixedincome.com.

ABOUT PGIM PGIM is the global asset management business of Prudential Financial, Inc. (PFI). PFI has a history that dates back over 145 years and through more than 30 market cycles. With 41 offices in 19 different countries (as of March 31, 2024), our more than 1,450 investment professionals are located in key financial centers around the world.

Our firm comprises multi-managers that collaborate with each other and specialize in a particular asset class with a focused investment approach. This gives our clients diversified solutions with global depth and scale across public and private asset classes, including fixed income, equities, real estate, private credit, and other alternatives. As a leading global asset manager with $1.34 trillion in assets under management (as of March 31, 2024), PGIM is built on a foundation of strength, stability, and disciplined risk management.

For more information, visit pgim.com.

Prudential Financial, Inc. (PFI) of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom, or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. For more information, please visit news.prudential.com.

¹ Source: PGIM Investments, AUM as of June 21, 2024.

² The term PGIM as used in this announcement includes PGIM Investments LLC, an indirect, wholly owned subsidiary of Prudential Financial, Inc.

³ Morningstar Direct, as of April 30, 2024. Includes all active taxable and tax-exempt U.S. Open-End Funds and ETFs.

⁴ Source: Morningstar as of June 24, 2024.

PGIM Ultra Short Municipal Bond ETF Fund Risk

Risks of investing in the fund include but are not limited to the following: ETFs may trade at a premium or discount to net asset value or lack an active trading market, may be less liquid and may be subject to brokerage commission or other charges. The Fund may be subject to authorized participant concentration risk, since the Fund has a limited number of intermediaries that act as authorized participants and none of these authorized participants are or will be obligated to engage in creation or redemption transactions. To the extent that these intermediaries exit the business or are unable to or choose not to proceed with creation and/or redemption orders with respect to the Fund and no other authorized participant creates or redeems, shares of the Fund may trade at a discount to NAV and possibly face trading halts and/or delisting. The Fund is subject to debt obligations risk: debt obligations are subject to credit risk, market risk and interest rate risk and may also be subject to call and redemption risk, which is the risk that the issue may call a bond held by the Fund before maturity and the Fund may not be able to reinvest at the same rate; and municipal bonds and notes risk, where the Fund's holdings, share price, yield and total return may fluctuate in response to bond market movements and municipal bond market movements. The Fund may purchase municipal bonds that are insured to attempt to reduce credit risk, but does not provide protection against market fluctuations. Municipal lease obligations are typically not subject to the same voter approval and debt limits as other municipal securities, may be less secure as they are not obligations of the issuers, and may not have an active market. High yield ("junk") bonds are subject to greater credit and market risks. Variable and floating rate bonds are subject to credit, market and interest rate risks, may have a limited market, and may be subject to extended settlement periods. Zero coupon bonds may experience greater volatility due to changes in interest rates. The Fund is subject to new/small fund risk given the fund's recently commenced operations and limited operating history. Derivatives may carry market, credit and liquidity risks. Unlike other ETFs, the fund is subject to cash transaction risk as it may effect creation and redemptions in cash or partially cash so that the Fund may be less tax-efficient than an investment in an ETF that distributes portfolio securities in-kind. All or a portion of the Fund's dividends may be taken in account in determining the federal alternative minimum tax for individuals and may have other tax consequences. There is no guarantee the Fund's objective will be achieved. Risks are more fully explained in the fund's prospectus.

PGIM Municipal Income Opportunities ETF Fund Risk

Risks of investing in the fund include but are not limited to the following: ETFs may trade at a premium or discount to net asset value or lack an active trading market, may be less liquid and may be subject to brokerage commission or other charges. The Fund may be subject to authorized participant concentration risk, since the Fund has a limited number of intermediaries that act as authorized participants and none of these authorized participants are or will be obligated to engage in creation or redemption transactions. To the extent that these intermediaries exit the business or are unable to or choose not to proceed with creation and/or redemption orders with respect to the Fund and no other authorized participant creates or redeems, shares of the Fund may trade at a discount to NAV and possibly face trading halts and/or delisting. The Fund is subject to debt obligations risk: debt obligations are subject to credit risk, market risk and interest rate risk and may also be subject to call and redemption risk, which is the risk that the issue may call a bond held by the Fund before maturity and the Fund may not be able to reinvest at the same rate; and municipal bonds and notes risk, where the Fund's holdings, share price, yield and total return may fluctuate in response to bond market movements and municipal bond market movements. The Fund may purchase municipal bonds that are insured to attempt to reduce credit risk, but does not provide protection against market fluctuations. Municipal lease obligations are typically not subject to the same voter approval and debt limits as other municipal securities, may be less secure as they are not obligations of the issuers, and may not have an active market. Fixed Income investments are subject to credit, market, prepayment and interest rate risks, and their value will decline as interest rates rise. High yield ("junk") bonds are subject to greater credit and market risks. Variable and floating rate bonds are subject to credit, market and interest rate risks, may have a limited market, and may be subject to extended settlement periods. Zero coupon bonds may experience greater volatility due to changes in interest rates. The Fund is subject to new/small fund risk given the fund's recently commenced operations and limited operating history. Derivatives may carry market, credit and liquidity risks. Unlike other ETFs, the fund is subject to cash transaction risk as it may effect creation and redemptions in cash or partially cash so that the Fund may be less tax-efficient than an investment in an ETF that distributes portfolio securities in-kind. All or a portion of the Fund's dividends may be taken in account in determining the federal alternative minimum tax for individuals and may have other tax consequences. There is no guarantee the Fund's objective will be achieved. Risks are more fully explained in the fund's prospectus.

Consider a fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus and summary prospectus contain this and other information about the fund. Contact your financial professional for a prospectus and summary prospectus. Read them carefully before investing.

Investing in exchange traded funds (ETFs) involves risks. Some ETFs have more risk than others. The investment return and principal value will fluctuate, and shares when sold may be worth more or less than the original cost, and it is possible to lose money.

The Funds are actively managed ETFs and thus do not seek to replicate the performance of a specified index. ETF shares are not individually redeemable from the Funds. Shares may only be redeemed directly from the Fund by Authorized Participants in Creation Units.

Fixed income investments are subject to credit, market, and interest rate risks (including duration risk and prepayment risk), and their value will decline as interest rates rise; call and redemption risk, where the issuer may call a bond held by the Funds for redemption before it matures and the Funds may lose income; liquidity risk, which exists when particular investments are difficult to sell; and emerging markets risk, which exposes the Funds to greater volatility and price declines.

Investment products are distributed by Prudential Investment Management Services LLC, member FINRA and SIPC. PGIM Investments is a registered investment advisor and investment manager. PGIM Fixed Income is an affiliate of PGIM and Prudential Financial company. © 2024 Prudential Financial, Inc. and its related entities. PGIM, PGIM Investments, PGIM Fixed Income and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

Investment products are not insured by the FDIC or any federal government agency, may lose value, and are not a deposit of or guaranteed by any bank or any bank affiliate.

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