Toronto-based First Asset Investment Management announced Tuesday that units of First Asset Enhanced Short Duration Bond ETF began trading today on the Toronto Stock Exchange (TSX) under the ticker symbol FSB.
The ETF anticipates launching a class of U.S. dollar denominated units in October, the First Asset announcement says. The U.S. dollar units will trade on the TSX under the ticker symbol FSB.U.
The ETF will be co-managed by Barry Allen, president and chief investment officer, and Paul Sandhu, vice president and portfolio manager, of Toronto-based Marret Asset Management Inc.
“First Asset Enhanced Short Duration Bond ETF is designed to generate positive returns in any interest rate environment while also maintaining very low volatility,” says Allen, in a statement.
The ETF’s investment objective is to provide absolute returns through interest income and capital gains and its risk objective is to have very low volatility and positive returns over any 12-month period. It will primarily invest in debt instruments across the credit spectrum including cash, government debt, investment-grade corporate debt, high-yield corporate debt, government debt futures, convertible debentures and credit derivatives.
The ETF’s strategy will primarily focus on U.S. and Canadian corporate bonds and will include the use of government bond futures to manage the duration of the fund according to the volatility objectives.
To minimize interest rate volatility, the ETF would typically target an overall portfolio duration of less than two years. It is intended that at all times at least 90% of the non-Canadian currency exposure attributable to the units will be hedged to the Canadian dollar, and at least 90% of the non-U.S. currency exposure attributable to the U.S. dollar units will be hedged to the U.S. dollar.