First Trust Global Portfolios has expanded its fixed income offering with the launch of an actively managed factor-based bond ETF.
The First Trust Low Duration Global Government Bond UCITS ETF (FSOV) is listed on the Euronext Amsterdam in a EUR share class and has an expense ratio of 0.45%.
FSOV invests in global sovereign fixed income securities with an objective of generating income and a secondary objective of capital growth. It is currency hedged which minimises the effect of currency exposure as well as reducing volatility.
First Trust applies the factors of carry, incremental yield increase per unit of duration, and value, the difference in yield across curves post currency hedging costs.
It enables the firm to select the most attractive countries and associated yield curve positioning for each country which satisfies these principles.
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Derek Fulton, CEO of First Trust Global Portfolios, said: “This investment grade, currency-hedged, global fixed income fund has a low to negative correlation to risky assets.
“We believe this can be a great diversifier to global equities, as well as offering a solution for asset managers if they want to dial-up or dial down their interest rate exposure.”
FSOV is First Trust's fourth fixed income ETF offered in Europe, joining the likes of the multi currency-hedged First Trust FactorFX UCITS ETF.