NBI launches unconstrained bond ETF sub-advised by JP Morgan

Oct 21st, 2019 | By | Category: Fixed Income

National Bank Investments (NBI) has launched a new actively managed fixed income in Canada.

Annamaria Testani, Vice-President, National Sales at National Bank Investments.

The NBI Unconstrained Fixed Income ETF (NUBF CN) provides unconstrained global bond exposure and is sub-advised by JP Morgan.

The fund has listed on Toronto Stock Exchange and comes with an expense ratio of 0.75%.

Annamaria Testani, Vice-President, National Sales at National Bank Investments, commented, “In this increasingly uncertain environment, fixed income investors want to manage risk while generating yield and returns.

“Opting for an active approach to fixed income investing provides latitude to proactively adjust the ETF’s portfolio and reduces concentration risk. We are pleased to launch this new ETF that aims to help investors navigate market cycles.”

Investment process

Unlike index-based strategies, unconstrained strategies provide a flexible, go-anywhere approach. They possess significant latitude to pursue opportunities across the fixed income spectrum and may invest in different sectors, credit ratings, maturities, and geographic regions.

This flexibility allows the fund’s managers to capitalize on evolving high-conviction ideas. The fund may adopt a conservative allocation in uncertain periods or move tactically into higher-risk opportunities as conditions warrant. It can also adapt its sensitivity to interest rates (duration) depending on the economic backdrop.

While the fund is unconstrained in its investment processes, the prospectus notes that it will limit its exposure to high-yield securities and second-lien floating-rate loans at 75% and 10% respectively.

The fund is managed by Bob Michele, Chief Investment Officer, Global Fixed Income, and Iain Stealey, Portfolio Manager, at JP Morgan. Income is distributed to investors on a monthly basis.

The launch brings the total number of ETFs offered by NBI to five. The other funds in its line-up include two actively managed ETFs targeting Canadian preferred shares and global real assets, as well as two passive products covering liquid alternatives and Canadian family-owned businesses that are publicly listed.

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