Federated Hermes launches total return bond ETF

Jan 9th, 2024 | By | Category: Fixed Income

Federated Hermes has introduced a new actively managed fixed income ETF providing exposure to a ‘core-plus’ multi-sector bond strategy.

John B. Fisher, President and CEO of Federated Advisory Companies

John B. Fisher, President and CEO of Federated Advisory Companies.

The Federated Hermes Total Return Bond ETF (FTRB US) has been listed on NYSE Arca with an expense ratio of 0.39%.

According to Federated Hermes, FTRB benefits from the firm’s 50 years of experience managing fixed income securities, a veteran portfolio management team, and the advantages of the ETF structure.

The fund is led by Senior Portfolio Managers Donald Ellenberger, Nathan Kehm, and Jerome Conner who collectively have 99 years of investment industry experience. The trio is also responsible for the management of the $13.5 billion Federated Hermes Total Return Bond Fund, a seasoned mutual fund that follows the same multi-sector, core-plus investment approach.

Commenting on the new listing, John B. Fisher, President and CEO of Federated Advisory Companies, said: “During times of market volatility, fixed income securities can be an important part of a diversified portfolio. By offering the rigorously vetted approach used for our recognizable fixed income products in an ETF structure, Federated Hermes remains well-poised to deliver on investment client mandates in a variety of formats.”

Investment strategy

Benchmarked against the Bloomberg US Aggregate Bond Index, the ETF invests in a broad mix of bond sectors including US government, mortgage-backed, and investment-grade corporate fixed income with additional exposure to sectors such as high yield and emerging markets debt.

Up to 20% of the portfolio may be dedicated to non-US dollar-denominated securities, while the cap on non-investment grade fixed income is 25%.

The strategy combines top-down decision-making with bottom-up security selection to build a diversified, risk-managed portfolio favouring sectors that the portfolio management team believes will benefit from changes in economic and market conditions.

Historically, Federated Hermes’ core-plus strategy has dynamically shifted sectors, adjusted duration, managed the yield curve, and overseen currency positioning based on guidance from the firm’s independent macro committees.

The fund represents Federated Hermes’ fourth ETF following the December 2021 launch of the Federated Hermes Short Duration High Yield ETF (FHYS US) and Federated Hermes Short Duration Corporate ETF (FCSH US), both of which deliver actively managed short-duration fixed income exposures; and the 2022 introduction of the Federated Hermes US Strategic Dividend ETF (FDV US), an actively managed US equity fund targeting companies offering sustainable dividends.

Tags: , , , , , ,

Leave a Comment