On June 30, First Trust Portfolios Canada announced the launch of its First Trust Short Duration High Yield Bond Exchange Traded Fund (ETF).
The ETF will invest primarily in a diversified portfolio of debt securities that have been rated as below investment grade by Moody's Investor Services and Standard & Poor's (Ba1/BB+ or below) or in securities with a similar rating from another designated rating organization. Securities may also be unrated but considered to be of comparable credit quality. The ETF’s mandate also allows it to 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 net asset value. The weighted average effective duration of the portfolio’s 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 First Trust Portfolios Canada. "The First Trust Short Duration High Yield ETF aims to enable investors to lower their portfolio duration and maintain an attractive yield."