First Asset launches enhanced government bond ETF on TSX

Aug 1st, 2018 | By | Category: Fixed Income

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First Asset Investment Management has launched the actively managed First Asset Enhanced Government Bond ETF (FGO CN) on Toronto Stock Exchange.

First Asset launches actively managed enhanced government bond ETF on TSX

The ETF is the third to be introduced as a collaboration between First Asset and Marret Asset Management.

Co-managed by Toronto-based Marret Asset Management, which specialises in credit fixed income portfolios, the ETF aims to provide long-term total return through both interest income and capital appreciation.

The portfolio consists primarily of government debt issued globally, but may also hold other debt instruments across the credit spectrum including cash, investment-grade corporate debt, high-yield corporate debt, government debt futures, convertible debentures and credit derivatives.

The portfolio manager has full flexibility with regards to duration positioning and will seek to provide optimal exposure through changing market conditions. At no time will more than a quarter of the portfolio be comprised of high-yield corporate debt securities.

“Today’s launch is another step in expanding our partnership with First Asset,” said Barry Allan, Chief Investment Officer at Marret Asset Management. “The First Asset Enhanced Government Bond ETF is designed to provide investors true, active management across the duration spectrum. The key to providing our investors with a solution to capitalize on both the current and upcoming phases of the credit cycle rests on the flexibility of actively shortening the portfolio’s duration in periods of rising interest rates, while also having the option to rotate to longer duration government bonds, for additional recession protection.”

FGO trades in Canadian dollars while a US dollar-denominated share class is also available under the ticker symbol FGO.U CN. Each share class hedges at least 90% of its foreign currency exposure back to the currency of the share class on a monthly basis.

The ETF comes with a management expense ratio (MER) of 0.60%. Distributions will be made to investors on a quarterly basis.

It is the third time that First Asset and Marett have collaborated on an ETF with both previous offerings – the First Asset Investment Grade Bond ETF (FIG CN) and First Asset Enhanced Short Duration Bond ETF (FSB CN) – also being actively managed.

The investment grade fund (FIG), launched in August 2016, provides exposure to a high quality, diversified mix of investment grade corporate bonds from issuers in Canada, the US and Europe. It has gathered approximately CAD$580m in assets under management.

The short duration fund (FSB) was introduced in September 2017 and has CAD$320m in AUM. This fund invests primarily in US and Canadian corporate bonds as well as government bond futures to manage duration.

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