First Trust, the sixth-largest U.S. issuer of exchange traded funds, will introduce the First Trust Strategic Income ETF (NasdaqGM: FDIV) today.
The new actively managed ETF is multi-strategy fund that generates income through positions in various asset classes, including high-yield bonds and senior loans, mortgage-related securities, preferred securities, international sovereign bonds, master limited partnerships (MLPs) and energy infrastructure companies, and dividend stocks.
The fund’s primary investment objective is to seek risk-adjusted income. The fund’s secondary investment objective is capital appreciation. The fund will seek to achieve its investment objectives using multiple investment categories, targeted investment strategies and specialized management teams, said First Trust in a statement.
FDIV will be the eleventh actively managed ETF issued by First Trust. Increased demand for the products and the potential for a more favorable regulatory environment could make actively managed ETFs a $500 billion asset class by 2020, according to a new report by SEI Investments.
Illinois-based First Trust has previously found success with actively managed offerings, including the $825.1 million First Trust North American Energy Infrastructure Fund (NYSEArca: EMLP) and the $199.6 million First Trust Senior Loan ETF (NasdaqGM: FTSL).
FDIV is the fifth actively managed ETF launched by First Trust this year and ninth new ETF overall from the issuer.
“Finding ways to generate income for clients, while discerning the proper balance between income and risk, is one of the toughest challenges facing financial advisors today,” said Ryan Issakainen, CFA, Senior Vice President, Exchange-Traded Fund Strategist at First Trust, in the statement. “This ETF may provide an alternative to traditional fixed-income funds, investing in a diversified group of income-producing fixed-income and equity asset classes, each actively-managed by a talented team of specialized asset managers.”
Other multi-asset ETFs from First Trust include the irst Trust NASDAQ Multi-Asset Diversified Income Index Fund (NasdaqGM: MDIV) and the First Trust International Multi-Asset Diversified Income Fund (NasdaqGM: YDIV)
ETF Trends editorial team contributed to this post.