First Trust Launches Actively Managed Short Duration High Yield Bond ETF | News Canada Binary.
First Trust Launches Actively Managed Short Duration High Yield Bond ETF
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The Future is Binary – New ETF Provides Currency Hedged and Duration Managed Exposure to High Yield Corporate Bond Market
TORONTO, June 30, 2014 /CNW/ – FT Portfolios Canada Co. (“First Trust Canada”), a privately owned company is pleased to announce the launch and initial issuance of the common and advisor class of units of the First Trust Short Duration High Yield Bond ETF (the “First Trust ETF”) (TSX: FHY/FHY.A).
To achieve its investment objectives, the First Trust ETF will primarily invest in a diversified portfolio of below investment grade debt securities as rated by Moody’s Investor Services, Inc., and Standard & Poors (Ba1/BB+ or below) or a similar rating by a designated rating organization (as defined in NI 81-102). Securities may also be unrated but considered to be of comparable credit quality to other below investment grade securities. The First Trust ETF may also invest opportunistically in senior floating rate loans, investment grade debt securities and convertible bonds. The fund’s aggregate exposure to senior floating rate loans will be limited to 40% of its NAV. The weighted average effective duration of the First Trust ETF’s portfolio securities may not exceed 3 years.
“Given the historically low interest rates in the present fixed-income market, investors have few options for earning attractive rates of return without incurring significant interest rate risk,” William Housey, CFA, Senior Vice President and Senior Portfolio Manager for the Leveraged Finance Investment Team of First Trust Advisors. “By investing in high-yield bonds and other fixed income asset classes that exhibit a low correlation with traditional fixed income investments*, our ETF may improve both diversification and risk-adjusted returns within diversified fixed-income portfolios,”said Mr. Housey. “Through our rigorous, repeatable and meticulous bottom-up credit evaluation process, Canadian investors may be able to capitalize on the best high-yield opportunities from strong issuers in a variety of sectors.”
“With a firming U.S. economy, improving corporate fundamentals and the end of the Fed’s bond purchase program drawing near, we expect higher interest rates in the future” said Fraser Howell, CEO of FT Portfolios Canada Co. ” The First Trust Short Duration High Yield ETF aims to enable investors to lower their portfolio duration and maintain an attractive yield.” adds Howell.
*traditional fixed income investments include long-term investment grade corporate bonds, and long-term government bonds.
About First Trust
The First Trust companies are a well-respected global enterprise with a history in the U.S. market since 1991 and in Canada since 1996. As at April 30, 2013, First Trust Advisors L.P., the portfolio advisor for the First Trust AlphaDEXTM ETFs, has approximately US $25 billionin ETF assets under management and more than US $90 billion total assets under supervision or management. First Trust is the enterprise name used for the various businesses conducted inEurope, Mexico, Canada and the U.S.