First Trust launches actively managed broad fixed income ETF

Feb 16th, 2017 | By | Category: Fixed Income

First Trust Advisors has launched the First Trust TCW Opportunistic Fixed Income ETF (Nasdaq: FIXD), a new actively managed ETF designed to give investors exposure to a multi-sector portfolio of fixed income securities, primarily focused on investment grade bonds. The fund is sub-advised and managed by TCW Investment Management.

First Trust launches actively managed broad fixed income ETF

Ryan Issakainen, Senior Vice President and ETF Strategist at First Trust.

The fund is not restricted in its asset category selection; its investments principally will include US government, agency or government-sponsored securities; Treasury Inflation Protected Securities; residential and commercial mortgage-backed securities, asset-backed securities; domestic and foreign corporate bonds; foreign government bonds including emerging markets; bank loans; and municipal bonds.

It is however limited to a maximum investment of 35% of its net assets in securities rated below investment grade.

Adopting a core and satellite approach to security selection, the ETF will attempt to generate alpha through sector allocation and security selection. The investment process comprises additional strategies including duration management, yield curve positioning and opportunistic trade execution.

According to TCW, the result is a portfolio that is diversified not only in a traditional sense across maturities, sectors and securities, but also across strategies that provide the opportunity to seek higher risk-adjusted returns.

“TCW takes a very careful and deliberate approach to new product development, and we could not be more pleased to launch this fund with an industry-leading partner like First Trust,” said Steve Kane, Portfolio Manager at TCW. “Given the increased market demand for actively managed fixed income ETFs, we believe this offering will provide another means for investors to access our team-based, value approach to managing fixed income portfolios.”

“We believe fixed income markets provide significant opportunities for active managers to add value,” added Ryan Issakainen, Senior Vice President and ETF Strategist for First Trust. “TCW is a world class institutional investment manager, and we’re thrilled to offer this core, fixed-income ETF.”

The ETF has a total expense ratio of 0.55% due to a contractual fee waiver in place until 13 February 2018. The fund’s gross expense ratio is 0.65%.

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