After all, the new ETF has a weighted average effective duration of just 0.21 years. Over 43% of FTSM’s 112 holdings are rate A-3 (short-term) with another 30% rated between BBB- and A, according to issuer data.
One way of looking at FTSM is that it bridges the gap between losing purchasing power via negative real returns in high-quality bonds or taking on increased credit risk with high-yield bonds.
FTSM’s portfolio managers have the flexibility to strategically rotate among various market sectors while maintaining a focus on preservation of capital and liquidity, according to First Trust.
First Trust Enhanced Short Maturity ETF Top Holdings
Chart Courtesy: First Trust