“The fund is managed by First Trust using a disciplined approach that focuses on a combination of quantitative analysis and fundamental research,” according to First Trust. “In seeking attractive income, the fund will focus on non-rated bonds, lower investment-grade bonds and below investment-grade or “high yield” municipal bonds, while offering daily liquidity and full transparency of holdings.”
The bulk of FMHI’s portfolio currently focuses on bonds with maturities ranging from five to 18 years in an effort to minimize interest rate risk. FMHI charges 0.55% per year, or $55 on a $10,000 position.
“Some municipalities have faced increasing economic challenges, which we believe has raised the importance of active credit analysis and municipal bond expertise,” said First Trust. “Unlike index-based ETFs that may simply rely on rating agencies for credit analysis, we believe it is critical to understand an issuer’s ability to meet its financial obligations. Active portfolio management allows the fund managers to make portfolio adjustments as conditions change.”
For more information on the munis market, visit our municipal bonds category.