Toronto-based FT Portfolios Canada Co. launched its First Trust Short Duration High Yield Bond ETF on Monday.
The ETF will invest primarily in a diversified portfolio of below investment grade debt securities rated by Moody’s Investor Services Inc. and Standard & Poors. Securities may also be unrated but considered to be of comparable credit quality to other below investment grade securities.
The First Trust ETF may also invest opportunistically in senior floating rate loans, investment grade debt securities and convertible bonds. The fund’s aggregate exposure to senior floating rate loans will be limited to 40% of its NAV. The weighted average effective duration of the First Trust ETF’s portfolio securities may not exceed 3 years.
“With a firming U.S. economy, improving corporate fundamentals and the end of the Fed’s bond purchase program drawing near, we expect higher interest rates in the future,” said Fraser Howell, CEO of FT Portfolios Canada Co. in a statement. “The First Trust Short Duration High Yield ETF aims to enable investors to lower their portfolio duration and maintain an attractive yield.”