Newfleet Asset Management, the first affiliated manager to utilize the white-label exchange traded fund services of Virtus Investment Partners, launched a flexible, unconstrained bond ETF strategy that can adapt to changing market conditions.
The Newfleet Multi-Sector Unconstrained Bond ETF (NYSEArca: NFLT), which began trading on August 10, tries to provide high current income and capital appreciation. NFLT has a 0.8% expense ratio.
The bond ETF will be managed by Newfleet Asset Management’s David Albrycht, president and chief investment officer; Jonathan Stanley, managing director, portfolio manager and sector manager for high yield credit; and Christopher Kelleher, senior managing director, senior portfolio manager and the head of institutional asset management.
The management team will target the right areas of the global bond market at the opportune times, implementing active sector rotation and disciplined risk management to achieve long-term excess returns.
The unconstrained investment style does not require a manager to adhere to a specific benchmark. Instead, unconstrained strategies allow a manager to focus on returns across many asset classes and sectors and the styles typically have a more long-term horizon. Moreover, a portfolio manager may use derivatives and other alternative asset classes to hedge market exposure.
“While NFLT embraces the virtues of diversification, the lack of formal sector, industry, or country limitations means that the team can express its highest conviction ideas,” according to Newfleet. “Unlike many unconstrained funds, however, NFLT does not invest in equities, which can be highly volatile and out-of-sync with bond investors’ expectations. Because the Fund is benchmark agnostic, Newfleet is not compelled to take risks embedded in the Index, such as unwanted exposure to rising interest rates or overvalued credits.”