Today, Federated Hermes launched an actively managed broad bond ETF. The Federated Hermes Total Return Bond ETF (NYSE Arca: FTRB) has an expense ratio of 0.49%. According to its prospectus, the fund focuses on investment-grade debt securities denominated in U.S. dollars.
“During times of market volatility, fixed-income securities can be an important part of a diversified portfolio,” said Federated Advisory Companies President and CEO John B. Fisher in a press release.
Interest rates are the highest they’ve been in 20 years. There’s renewed interest in fixed income strategies and the yield they can provide. Similarly, 2023 was a major year for active management. Such ETF strategies garnering strong inflows and significant investor attention.
“Demand for actively managed ETFs picked up in 2023 and is likely to persist in 2024 given the interest rate environment. Federated Hermes has strong fixed income expertise it can leverage for ETF-minded advisors,” said VettaFi Head of Research Todd Rosenbluth.
Total Return Bond Strategy
FTRB’s fund managers implement both top-down and bottom-up analysis to create the portfolio, a press release said. At the same time, the managers take into account diversification and risk management in their investment process, the document noted. The prospectus said that despite FTRB’s primary focus being on high-quality USD debt, the fund can also, within limits, invest in junk bonds and in issues denominated in foreign currencies.
Federated Hermes entered the ETF market in late 2021. FTRB joins three other funds offered by the firm. The lineup has more than $130 million in combined assets under management. The Federated Hermes U.S. Strategic Dividend ETF (FDV), which has about $77 million in AUM, is the largest fund in its ETF family.
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