First Trust Advisors that it has launched the First Trust Multi-Strategy Alternative ETF (LALT ), an actively managed ETF that seeks to provide long-term total return. The fund will primarily gain exposure to alternatives by investing in exchange traded products, including ETFs, exchange traded notes, and trusts backed by physical commodities or currencies.
LALT seeks to provide lower correlation and more diversified risk exposures over various market cycles as compared to traditional equity and fixed income benchmarks by investing in alternative asset categories and strategies including, but not limited to, hedged equity, long/short, event-driven, managed futures, commodities, real estate, opportunistic fixed income, relative value, currencies, and global macro.
Alternatives typically allocate capital based on investment approaches other than a “long-only” approach. First Trust argues in a press release announcing the fund’s launch that exposure to these alternative asset categories and investment strategies may help diversify risk, enhance returns, or generate higher yield than traditional investments.
“After a difficult year for both stocks and bonds, it’s no surprise that demand for alternatives has grown stronger,” said Ryan Issakainen, senior vice president and ETF strategist at First Trust, in the release. “We believe this ETF may been an effective tool for investment professionals seeking to diversify client portfolios while also potentially generating returns from multiple alternative risk premiums in the years ahead.”
LALT has a management fee of 0.20% with total annual expenses of 1.23% based on estimates of the expenses the fund expects to incur for the current fiscal year.
First Trust had approximately $190 billion in collective assets under management or supervision as of December 30.
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