First Trust Advisors has launched two new actively managed intermediate fixed income ETFs on the New York Stock Exchange. The First Trust Intermediate Duration Investment Grade Corporate ETF (NYSE Arca: FIIG) invests in in investment grade corporate debt. Meanwhile, the First Trust Intermediate Government Opportunities ETF (NYSE Arca: MGOV) targets U.S. government debt.
FIIG seeks to deliver current income and long-term capital appreciation by investing in investment grade corporate debt securities. The fund has an intermediate duration portfolio mandate. It seeks to construct a portfolio with a dollar weighted average duration of +/- 1.5 years of the Bloomberg U.S. Credit Corp 5-10 Year Index.
MGOV seeks to maximize long-term total return by investing in debt securities issued or guaranteed by the U.S. government. This includes mortgage-backed securities, U.S. Treasuries, pass-through securities, collateralized mortgage obligations, and commercial mortgage-backed securities. It also targets ETFs that principally invest in government securities, as well as “to-be-announced” transactions.
“A Compelling Solution in the Current Environment”
Amid the Fed aggressively raising interest rates, income and duration risk appear more balanced. First Trust’s managing director of fixed income William Housey said that “intermediate duration investment grade corporate bonds provide a compelling solution in the current environment.”
Added Housey: “an allocation to actively managed, intermediate duration investment grade credit is timely.” Housey also serves as FIIG’s portfolio managers.
The launch of FIIG and MGOV expands First Trust’s overall taxable fixed income ETF lineup to 15 funds.
First Trust has been expanding its overall suite of ETFs this year. In March, First Trust launched the First Trust Bloomberg Inflation Sensitive Equity ETF (FTIF). FTIF targets U.S. exchange-listed companies within sectors expected to benefit from rising prices. It also launched in March the First Trust Bloomberg Emerging Market Democracies ETF (EMDM), which seeks companies in emerging markets where political rights and civil liberties are highly regarded.
In February, First Trust listed the actively managed First Trust Multi-Strategy Alternative ETF (LALT). LALT gains exposure to alternatives by investing in exchange traded products backed by physical commodities or currencies.
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