Record-setting is a common occurrence in the exchange traded funds (ETFs) industry, but that doesn’t diminish its noteworthiness. After all, everyone loves interesting statistical nuggets, particularly when the related data pertain to fund flows and the like.

Speaking assets and flows, it’s those types of data points, among other reasons, that make the debut of the State Street® SPDR® UC Investments 90/10 Endowment Strategy Index ETF (UCBG) interesting. For now, this new ETF wears the crown in terms of the highest assets under management at the time of launch as it came to market $2.5 billion in assets.

The bulk of that tally is courtesy of UC Investments, the investment management arm of the University of California system. Those are the folks managing defined benefit pensions and retirement assets for employees of the 10 UC campuses and related healthcare systems.

UC Investments can easily afford the $2.5 billion allocated to the new ETF because it manages $236 billion, including retirement, endowment, and cash assets, according to its website.

UCBG Could Catch On

Another interesting point about UCBG is that while ETF issuers are known for pushing the envelope in a slew of other investment niches, the industry is home to a surprisingly low population of endowment-style ETFs.

UCBG can potentially gain traction with advisors and investors for multiple reasons. First, as ETFs are known to do, it democratizes access to a previously hard-to-reach investment concept. Second, and perhaps equally as important, UCBG isn’t a complex fund.

The new ETF tracks the UC Investments 90/10 Endowment Strategy Index – a gauge in which the 90% is the S&P 500 and the 10% is the S&P U.S. Investment Grade Corporate Bond 1-3 Year Index. The ETF’s index rebalances quarterly to maintain the 90/10 split.

“UC and S&P Dow Jones Indices developed the custom index, which was inspired by UC’s $7.9 billion Blue and Gold Endowment Pool, a long-term public markets strategy that since its inception seven years ago, has been the best performing product within UC’s $236 billion investment portfolio,” according to the issuer. “The strategy reflects UC’s conviction that low-cost, liquid, diversified public markets exposure can deliver compelling long-term returns while avoiding the complexity and illiquidity of traditional endowment models.”

More UCBG Perks

With seemingly everyone, advisors, clients, high-level professional investors and more, fretting about the current state of affairs in the bond market, UCBG’s emphasis on less rate-sensitive short duration bonds is a selling point. The index’s effective duration is just 1.66 years.

Additionally, the S&P U.S. Investment Grade Corporate Bond 1-3 Year Index will deliver higher income than the S&P 500 – something to consider at a time when the dividend yield on the equity index hovers near all-time lows.

These benefits can be had in inexpensive fashion as the new UCBG charges just 0.06% per year, or $6 on a $10,000 stake – surprisingly low for an endowment-style strategy in fund form.