Exchange traded fund provider First Trust is looking to venture into the the actively managed space, filing for a long/short high-yield corporate bond ETF.
According to an SEC filing, the First Trust High Yield Long/Short ETF will track high yield debt securities rated below investment grade, or “junk” bonds, including U.S. and non-U.S. corporate debt, bank loans and convertible bonds. The fund may include up to 10% of its assets in non-U.S. securities denominated in non-U.S. currencies. The ETF can also include investment grade debt to managed credit and duration risk.
Additionally, the fund will maintain a long and short position. All in all, the managers can utilize the 130/30, long/short strategy where the long positions may total up to 130% while keeping a 30% short position. The managers will take short positions in U.S. Treasury securities and investment-grade or junk corporate bonds that they believe will lag behind the market.
The ETF’s managers will seek to outperform the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index.
No tickers or expense ratios were provided.
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Max Chen contributed to this article.
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