First Trust added to its lineup of fixed income exchange traded funds last week with the debut of the First Trust Low Duration Strategic Focus ETF (NASDAQ: LDSF), an actively managed ETF of ETFs.
The new ETF “seeks to achieve its investment objectives by investing at least 80% of its net assets (including investment borrowings) in a portfolio of U.S.-listed exchange-traded funds (“ETFs”) that principally invest in income-generating securities that provide the Fund with an effective portfolio duration of three years or less,” according to First Trust.
LDSF’s methodology includes both top-down and bottom-up analysis in an effort to find attractive fixed income opportunities with less interest rate risk.
“The process combines these factors with disciplined bottom-up asset level analysis including views on rates, duration, credit, currency and current asset valuation,” said First Trust in a statement. “The relative attractiveness of the various fixed income asset classes is also evaluated in an attempt to best position the fund to take advantage of market trends and investment opportunities.”
LDSF’s roster is comprised exclusively of other First Trust bond ETFs. Those holdings include the First Trust Low Duration Mortgage Opportunities ETF (NasdaqGM: LMBS), First Trust Senior Loan ETF (NasdaqGM: FTSL) and the First Trust Enhanced Short Maturity ETF (FTSM). Those three ETFs combine for over 87% of LDSF’s weight.
LMBS, which is heavy on mortgage-backed securities (MBS), is LDSF’s largest holding at 39.80%.