Dynamic Funds and BlackRock Asset Management Canada Ltd., both based in Toronto, have launched a new actively managed fixed-income ETF on Wednesday that aims to help investors protect against the rising interest rate environment.
Dynamic iShares Active Investment Grade Floating Rate ETF begins trading on the Toronto Stock Exchange on Wednesday under the ticker symbol DXV.
The ETF aims to provide a floating rate of interest income while preserving capital by investing primarily in Canadian investment-grade corporate bonds and by using interest rate derivatives that seek to mitigate the effects of interest rate fluctuations.
The fund’s fixed-income and derivative exposure will be obtained by investing primarily in Dynamic Active Investment Grade Floating Rate Fund. That fund is managed by Marc-André Gaudreau, vice president and portfolio manager at 1832 Asset Management L.P., which manages Dynamic Funds.
“Investors looking to diversify their fixed-income holdings in a climate of rising Canadian interest rates will find DXV a compelling and relevant solution,” says Mark Brisley, managing director at Dynamic Funds, in a statement. “Portfolio manager Marc-André Gaudreau has a long history of using this investment approach, so we are excited to offer this mandate in the ETF format.”
Asset flows into fixed-income ETFs have softened recently amid investor fears of inflation and interest rate hikes. Floating-rate ETFs, however, attracted inflows during the month of February, according to a recent report from National Bank Financial Inc.
The new ETF has a management fee of 0.3%.