First Trust today announced the launch of the actively managed First Trust Balanced Income ETF (FTBI) on the NYSE Arca.
FTBI aims to deliver a steady stream of income that closely matches the performance of the Bloomberg Moderate Allocation Income Focus Index. The index is designed to capture income from three key asset classes.
A Three-Pronged Investment Strategy
FTBI invests mostly in a mix of First Trust ETFs, covering equities, fixed income, and commodities. The fund-of-funds approach provides investors with exposure to a range of income-generating ETFs across multiple assets.
Firstly, equity-linked ETFs make up about 60% of the portfolio. The equity portion is split evenly among three styles: core, growth, and value. These ETFs use strategies like buy-write or target income approaches and are equally weighted within each style group.
See More: Understanding Buy-Write and Covered Call ETFs
Around 35% of the fund is devoted to fixed-income ETFs. This includes funds investing in government bonds (12.25%), corporate bonds (14%), and a broad range of investment grade fixed-income sectors (8.75%). The allocation is further divided by the maturity lengths of the bonds to provide a balance of stability and yield. This segment aims to deliver steady income while managing risk.
Lastly, roughly 5% of the portfolio is allocated to commodity exposure, specifically gold. These equally weighted commodity-linked ETFs invest through flexible exchange options tied to gold-focussed products, offering fixed income to short-term U.S. Treasury yields. This adds diversification and inflation hedging to the mix.
The top holdings at inception are the First Trust BuyWrite Income ETF (FTHI ), FT Vest Technology Dividend Target Income ETF (TDVI ), the First Trust Nasdaq BuyWrite Income ETF (FTQI ) and the First Trust Smith Opportunistic Fixed Income ETF (FIXD ).
FTBI is rebalanced twice a year. Additionally it carries an expense ratio of 0.97%.
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