First Trust Global Portfolios (FTGP) has launched a second actively-managed, factor based fixed income UCITS ETF.
The First Trust Low Duration Global Government Bond UCITS ETF aims to provide attractive returns over the medium to long term by investing in global sovereign fixed income securities, the company said in a statement earlier today announcing the launch.
The fund's primary objective is to generate income with a secondary objective of capital growth. Being currency hedged, the fund will seek to minimize the effect of underlying currency exposure offering the opportunity of similar returns and diversification but significantly reduced volatility, with lower interest rate risk than the traditional benchmarks such as Bloomberg Barclays Global Treasury Index, FTGP said.
Derek Fulton, pictured left, chief executive officer at FTGP, called the fund "groundbreaking" as it aims to meet the growing demand for innovation and factor-based
investment within fixed income.
"This investment grade, currency hedged, global fixed income fund has a low to negative correlation to risky assets," he said. We believe this can be a great diversifier to global equities, as well as offering a solution for asset managers if they want to dial up or dial down their interest rate exposure."
"True innovation in fixed income has, up until now, not been as widely adopted as in the equity ETF market but is undoubtedly gaining momentum. Until recently Investors choices have been limited to the star active manager or the market cap weighted passive benchmark solution. Investors or asset allocators searching for diversification can be hamstrung by the highly concentrated nature of the benchmark, which is often magnified by growing debt weighted schemes that overweight the most indebted countries.
"The largest two regional allocations (the United States and Japan) currently account for over half of the Bloomberg Barclays Global Treasury Index."
The fund is aimed at wealth managers, discretionary fund managers, advisers and institutional investors, with a total expense ratio of 0.45, and will available in the EUR share class on the Euronext Amsterdam from the 21st November 2019.
"The use of transparent, robust and repeatable processes, combined into an ETF structure, offers a marrying of two great innovations and an attractive solution for asset allocators looking for diversification in fixed income," Fulton added. "We are delighted to be bringing this ground-breaking new product to market"
FTGP is a UK-based affiliate of First Trust Advisors LP. In Europe FTGP, which came to market in 2011, now offers 15 UCITS ETFs. First Trust affiliates had total assets under management or supervision of $134.98bn as at 30 September 2019.