First Trust Advisors L.P., begun trading a new Active Fixed Income ETF, the First Trust TCW Opportunistic Fixed Income ETF (Nasdaq: FIXD), on Wednesday, February 15, 2017. Here is a synopsis of the new ETF:
|Symbol: FIXD||Exchange: NASDAQ|
|Name: First Trust TCW Opportunistic Fixed Income ETF||Net Expense Ratio: 0.55%|
The First Trust TCW Opportunistic Fixed Income ETF is an actively managed ETF which seeks to maximize long-term total return.
Under normal market conditions, the Fund pursues its objective by investing at least 80% of its net assets (including investment borrowings) in fixed income securities of any credit quality. The Fund’s investments principally include securities issued or guaranteed by the U.S. government or its agencies, instrumentalities or U.S. government-sponsored entities; Treasury Inflation Protected Securities (TIPS); agency and non-agency residential mortgage-backed securities (RMBS); agency and non-agency commercial mortgage-backed securities (CMBS); agency and non-agency asset-backed securities (ABS); domestic corporate bonds; fixed income securities issued by foreign corporations and foreign governments, including emerging markets; bank loans, including first lien senior secured floating rate bank loans (Senior Loans); municipal bonds; and other debt securities bearing fixed interest rates of any maturity. The Fund may also invest in collateralized loan obligations (CLOs), floating rate securities, variable rate securities and Rule 144A securities.
The Fund’s sub-advisor, TCW Investment Management Company LLC will attempt to focus the Fund’s portfolio holdings in areas of the fixed income market (based on quality, sector, coupon or maturity) that the Sub-Advisor believes to be relatively undervalued. Under normal conditions, the Fund’s average portfolio duration varies within one year (plus or minus) of the portfolio duration of the securities comprising the Bloomberg Barclays U.S. Aggregate Index. As a separate measure, there is no limit on the weighted average maturity of the Fund’s portfolio. While maturity refers to the expected life of a security, duration is a measure of the expected price volatility of a debt security as a result of changes in market rates of interest.
The Fund invests in mortgage-backed securities which may be, but are not required to be, issued or guaranteed by the U.S. government, its agencies or instrumentalities, such as Ginnie Mae and U.S. government-sponsored entities, such as Fannie Mae and Freddie Mac. Government agency or instrumentality securities have different levels of credit support. The Fund may invest in such government supported mortgage-backed securities by investing in to-be announced transactions. The Fund may also invest in privately-issued mortgage-backed securities; however, the Fund will not invest more than 20% of its assets invested in fixed income securities in non-agency sponsored mortgage-backed securities.
Under normal market conditions, the Fund may invest up to 35% of its net assets in corporate, non-U.S. and non-agency debt and other securities rated below investment grade by one or more nationally recognized statistical rating organization (NRSRO), or, if unrated, judged to be of comparable quality by the Sub-Advisor (high yield or junk bonds). The Fund may also invest up to 20% of its net assets in securities denominated in foreign currencies and securities of issuers with significant ties to emerging markets, as determined by the Sub-Advisor. The Sub-Advisor considers emerging market countries to be countries that are characterized by developing commercial and financial infrastructure with significant potential for economic growth and increased capital market participation by foreign investors.
Fund Top Holdings (02/16/17):
|U.S. Treasury Note, 1.875%, due 01/31/2022||20.11%|
|U.S. Treasury Note, 1.125%, due 01/31/2019||13.80%|
|U.S. Treasury Note, 2%, due 11/15/2026||8.35%|
|U.S. Treasury Bond, 2.875%, due 11/15/2046||6.79%|
|Fannie Mae TBA, 4.50%, due 09/01/2040||3.73%|
|GNMA TBA, 3.50%, due 09/01/2044||2.98%|
|Fannie Mae TBA, 4%, due 02/01/2043||2.82%|
|Fannie Mae TBA, 3.50%, due 02/01/2044||1.98%|
|Fannie Mae TBA, 3%, due 07/01/2044||1.87%|
|JPMORGAN CHASE & CO 1.70%, due 03/01/2018||1.49%|
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