First Trust Advisors has launched an active fixed income ETF, the First Trust Core Investment Grade ETF. The fund seeks to maximize long-term total return by investing 100% of its investment portfolio in investment-grade securities. This includes Treasuries, TIPS, mortgage-backed securities, asset-backed securities, U.S. corporate bonds, non-U.S. fixed income securities, municipal bonds, and CMOs.
Jim Snyder, Jeremiah Charles, Todd Larson, Owen Aronson, Nathan Simons, and Scott Skowronski are the fund’s portfolio managers. FTCB’s investment management team analyzes foundational inputs to identify potential sources of alpha through sector allocation and active duration management.
Investment decisions follow a clearly defined and repeatable process. This process undergoes constant scenario analysis and stress testing to seek superior risk-adjusted returns over time.
Risk Management Critical for Fixed Income Investments
The portfolio managers expect the fund will hold up better in a recessionary environment because of the lower credit risk. They also believe the quantitative strategies they deploy will do well within today’s bond market environment.
“The last few years have illustrated how critical risk management is for fixed income investments,” said First Trust ETF Strategist Ryan Issakainen. He expressed confidence in FTCB’s portfolio management team “to produce better risk-adjusted returns than passive benchmarks."
FTCB carries an expense ratio of 0.55%.
A Quickly Growing ETF Lineup
The addition of FTCB expands First Trust’s overall taxable fixed income ETF lineup to 16 funds. But beyond its fixed income funds, the issuer is quickly growing its overall ETF suite. Last week, it listed First Trust Emerging Markets Human Flourishing ETF (FTHF ). The fund targets companies from emerging markets that have a high “Human Dignity Score,” according to nonprofit organization Freedom House.
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