It is not often an ETF in the fixed income realm debuts in August and gathers more than $1 billion in new assets inside of a three month period, but such is the case with FTSM (First Trust Enhanced Short Maturity ETF, Expense Ratio 0.35%).
First Trust is not necessarily well known as a Fixed Income shop in terms of its ETF offerings, but FTSM is off to quick start with clear institutional interest building amid heavier trading volume at times and one sided inflows.
What exactly does FTSM set out to do? According to fund literature, “uses an actively managed strategy that invests in short-duration securities, which are primarily U.S. dollar-denominated, investment-grade securities.” It adds that “the fund will be invested across a broad range of asset classes to maintain diversification and at least 80% of the fund’s assets will be investment-grade securities at the time of purchase” and also notes “the fund will utilize a short-duration strategy that may offer the potential for enhanced income, while focusing on preservation of capital and daily liquidity.”
In short, we see a few sound bites here that are clearly appealing to portfolio managers, which are “actively managed,” and the “potential for enhanced income” because we know that there is always a growing appetite for “more yield” among ETF model builders, especially if they can get it without stretching their risk budget.
Currently, top holdings in FTSM include bonds from corporations such as Conagra Foods Inc., DCP Midstream LLC, Arrow Electronics Inc. as well as Glencore Funding LLC, in addition to U.S. Treasury note exposure among the top five positions.
With good size fixed income rotations occurring in the marketplace not only from ETF to ETF, but also clearly money in motion from Fixed Income based mutual funds on both institutional and retail levels, FTSM may continue to grow in popularity.
First Trust Enhanced Short Maturity Fund
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