First Trust Expands its Actively Managed Fixed Income Lineup with the First Trust Limited Duration Investment Grade Corporate ETF
WHEATON, Ill--(BUSINESS WIRE)--First Trust Advisors L.P. (“First Trust”) a leading exchange-traded fund (“ETF”) provider and asset manager, announced today that it has launched the First Trust Limited Duration Investment Grade Corporate ETF (NYSE Arca: FSIG) (“the fund”). FSIG seeks to deliver current income by investing at least 80% of its net assets (plus any borrowings for investment purposes) in investment grade corporate debt securities.* In addition, the fund has a limited duration portfolio mandate and seeks to construct a portfolio that has a weighted average duration of +/- one year of the Bloomberg U.S. Corporate Bond 1-5 Year Index, which may provide less interest rate volatility relative to a longer duration corporate bond portfolio. A security’s duration is a measure of its price sensitivity to interest rate movements. In other words, it tells the investor how much the security’s price is likely to change for a given change in interest rates.
Finding opportunities to generate attractive income in a low interest rate environment can be challenging. Investment grade corporate bonds with short maturities may provide attractive income and diversification benefits to fixed income portfolios. The portfolio management team believes the yield advantage is compelling compared with U.S. Treasuries and mortgage-backed securities. For these reasons, against a market backdrop of central bank yield suppression, short maturity investment grade corporate bonds may provide the appropriate middle ground between moving too far down in credit quality and too far out on the maturity curve to capture income potential.
“We believe an allocation to actively managed, short duration investment grade credit is timely given the expectation for both continued inflationary pressure and for higher interest rates going forward. Investors looking to balance yield and duration exposure, while core bonds and other long-duration fixed income asset classes are under pressure, may find short duration investment grade corporate bonds provide a smart and durable solution in this environment,” said William Housey, CFA, Managing Director of Fixed Income, Senior Portfolio Manager at First Trust, who serves as one of the fund’s portfolio managers.
In addition to Mr. Housey, Todd Larson, CFA, Senior Vice President at First Trust; Eric Maisel, CFA, Senior Vice President at First Trust; Jeffrey Scott, CFA, Senior Vice President at First Trust; and Nathan Simons, CFA, Vice President at First Trust, also serve as portfolio managers to the fund. The investment philosophy of the portfolio management team (the "Team") is based on the belief that deep fundamental credit analysis performed by a highly experienced credit team, within a risk managed framework, will generate higher absolute and risk-adjusted returns within investment grade debt strategies. This investment philosophy is expressed by the Team through an investment process that combines rigorous bottom-up fundamental credit analysis and disciplined portfolio construction.
For more information about First Trust, please contact Ryan Issakainen at (630) 765-8689 or RIssakainen@FTAdvisors.com.
About First Trust
First Trust is a federally registered investment advisor and serves as the fund’s investment advisor. First Trust and its affiliate First Trust Portfolios L.P. (“FTP”), a FINRA registered broker-dealer, are privately held companies that provide a variety of investment services. First Trust has collective assets under management or supervision of approximately $218 billion as of October 29, 2021 through unit investment trusts, exchange-traded funds, closed-end funds, mutual funds and separate managed accounts. First Trust is the supervisor of the First Trust unit investment trusts, while FTP is the sponsor. FTP is also a distributor of mutual fund shares and exchange-traded fund creation units. First Trust and FTP are based in Wheaton, Illinois. For more information, visit http://www.ftportfolios.com.
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*The use of leverage is not a principal investment strategy of the fund.