MIL-OSI: FolioBeyond Rising Rates ETF (RISR) Secures Preliminary National Association of Insurance Commissioners (NAIC) Designation


Source: GlobeNewswire (MIL-OSI)

NEW YORK, June 22, 2022 (GLOBE NEWSWIRE) — FolioBeyond announces that its flagship ETF, the FolioBeyond Rising Rates ETF (RISR), has received a preliminary designation from the National Association of Insurance Commissioners (NAIC) of 1.B for regulatory filing purposes for insurance companies. This designation allows insurance companies to submit their investment in RISR for approval. With this designation, insurance companies are able to take advantage of look-through treatment for regulatory capital.

“With the NAIC 1.B designation, both property & casualty and life insurance companies will be able to use RISR’s highly-rated portfolio exposure to increase diversification for general accounts and annuity products,” said Yung Lim, CEO of FolioBeyond. “We’re excited for this audience to have the ability to invest in RISR, taking advantage of the current market environment RISR thrives in as well as the look-through treatment for risk-based capital.”

RISR launched in September 2021 and manages a diversified portfolio of agency mortgage-backed securities interest-only (“MBS IOs”) that provide insurance companies with access to this government agency-backed asset class, which offers a liquid alternative for reducing duration and enhancing income potential . MBS IOs receive only the interest component of the monthly payments from millions of U.S. homeowners. As interest rates rise, homeowners are far less likely to prepay their mortgages. The IO is positioned to receive positive current income for years longer than when rates were very low, as they were under recent monetary policy. 

RISR generates a positive cash flow return from its IO holdings and does not have the negative carry that comes with buying options, as found with other bond fund strategies. 

“This is the first time a strategy like this has been offered in an ETF wrapper for the institutional investor,” said George Lucaci, global head of distribution for FolioBeyond. “RISR provides negative duration with current income, and is implemented with MBS IOs that have excellent secondary market depth and liquidity.”

To learn more about the FolioBeyond Rising Rates ETF, visit our website

About FolioBeyond 

FolioBeyond is an asset management firm that utilizes advanced algorithms as well as artificial intelligence, (“AI”) and machine learning tools designed to build diversified portfolios, manage risk, deliver optimal returns, and provide customized asset management solutions for both fixed income and equity portfolios. 

Preliminary NAIC Designations are the intellectual property of the National Association of Insurance Commissioners (NAIC) and are redistributed here under License. A Preliminary NAIC Designation is an opinion of the NAIC Securities Valuation Office (SVO) of the probable credit quality designation that would be assigned by the SVO to an investment if purchased by an insurance company and reported to the SVO. A Preliminary NAIC Designation is only one of the regulatory factors considered by the SVO as part of its analysis of probable regulatory treatment under the Regulatory Treatment Analysis Service (RTAS). A full discussion of such other regulatory factors is set forth in the RTAS Letter provided to [the Fund Sponsor]. A Preliminary NAIC Designation cannot be used to report the Fund to state insurance regulators. However, the purchasing insurance company may obtain an NAIC Designation for the Fund by filing the security and final documents for the Fund with the SVO. The indication of probable regulatory treatment indicated by a Preliminary NAIC Designation is not a recommendation to purchase the Fund and is not intended to convey approval or endorsement of the Fund Sponsor or the Fund by the NAIC.


Duration : Duration is a measure of the relationship between interest rates and price for a fixed income security. Positive duration refers to a relationship whereby prices decline as interest rates rise, while negative duration refers to a relationship whereby prices increase as interest rates rise.


Investing involves risk, including the possible loss of principal. 

The value of interest-only mortgage-backed securities “MBS IOs” is more volatile than other types of mortgage related securities. They are very sensitive not only to declining interest rates, but also to the rate of prepayments. MBS IOs involve the risk that borrowers may default on their mortgage obligations or the guarantees underlying the mortgage-backed securities will default or otherwise fail and that, during periods of falling interest rates, mortgage-backed securities will be called or prepaid, which may result in the Fund having to reinvest proceeds in other investments at a lower interest rate. 

The Fund’s derivative investments have risks, including the imperfect correlation between the value of such instruments and the underlying assets or index; the loss of principal, including the potential loss of amounts greater than the initial amount invested in the derivative instrument. The value of the Fund’s investments in fixed income securities (not including MBS IOs) will fluctuate with changes in interest rates. Typically, a rise in interest rates causes a decline in the value of fixed income securities owned indirectly by the Fund. 

The Fund is non-diversified and may invest more of its assets in the securities of a single issuer or a smaller number of issuers than if it were a diversified fund. As a result, the Fund may be more exposed to the risks associated with and developments affecting an individual issuer or a smaller number of issuers which may increase the Fund’s volatility and have a greater impact on its performance. The Fund is new with no operating history or track record for an investor to base their investment decision upon. 

This release is being made available for informational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services or an offer to sell or solicitation to buy any securities or related financial instruments in any jurisdiction. 

Positive carry is a strategy that involves borrowing money in order to invest it to make a profit on the difference between the interest paid and the interest earned. 

Negative carry is a condition in which the cost of holding an investment or security exceeds the income earned  while holding it. 

Positive current income is a regular series of cash flows that are routinely received from investments in the  form of dividends, interest, and other income sources. 

The Funds’ investment objectives, risks, charges and expenses must be considered carefully before investing.  For the summary and/or statutory prospectuses containing this and other important information for the Funds  please call 877-358-0096. Read the prospectus carefully before investing. 

Funds are distributed by Foreside Fund Services, LLC. 

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