First Trust brings FGOV factor-based active fixed income UCITS ETF to LSE
First Trust has launched the actively managed First Trust Low Duration Global Government Bond UCITS ETF (FGOV) on the London Stock Exchange.
Initially listed on the Euronext Amsterdam in November 2019, the fund applies a rules-based methodology to select carry and value opportunities across global sovereign bond yield curves.
The fund's primary objective is to generate income with a secondary objective of capital growth. Being currency hedged, the fund will seek to minimise the effect of its underlying currency exposure, offering the opportunity of similar returns and diversification but with significantly reduced volatility. In addition, by using a low duration active management strategy, the fund will look to target consistent interest rate exposure while still allocating to the most attractive regions and points on each yield curve. The strategy will aim to deliver lower interest rate risk than more traditional benchmarks.
Leonardo Da Costa, Senior Portfolio Manager at First Trust Global Portfolios said: “In this now protracted environment of flat yield curves and negative interest rates across many fixed income markets, a disciplined approach that comes from utilising a rules-driven process becomes increasingly important. The fund targets its exposure towards the steepest yield curves in its universe of investment-grade sovereign fixed income securities where investors are better compensated for taking interest rate risk. The low duration target means the overall fund duration is maintained between two and four, positioning it to help investors increase diversification, decrease correlations and lower duration risk while avoiding some of the perils of this low or negative interest rate world.
“This actively managed, currency hedged, factor-based ETF offers wealth managers access to real innovation in the fixed income space which, historically has been limited to the preserve of equity markets. In today’s markets, investors are searching for attractive, transparent solutions to access enhanced fixed income exposure. We have had significant interest in this strategy since launching it on the Euronext last year, and we are delighted to be bringing it to the London Stock Exchange.”
The fund is aimed at wealth managers, discretionary fund managers, advisers and institutional investors. With a total expense ratio of 0.45, the First Trust Low Duration Global Government Bond UCITS ETF (“FGOV”) will be available in the distribution share class on the London Stock Exchange from 8 October 2020.