Toronto-based FT Portfolios Canada Co. Wednesday announced the launch on a new exchange traded fund, First Trust Senior Loan ETF (CAD-Hedged).
The new ETF is available in common and advisor class units, and trades on the Toronto Stock Exchange (TSX:FSL; TSX:FSL.A).
The ETF seeks to provide unitholders with a high level of current income by investing primarily in a diversified portfolio of senior floating rate loans and debt securities, with capital appreciation as a secondary objective. It will primarily invest in a portfolio of senior floating rate loans which are generally rated at or below ‘BB+’ by Standard & Poor’s, or ‘Ba1′ or less by Moody’s Investor Services, Inc., or a similar rating by an approved credit rating organization. The fund attempts to outperform the S&P/LSTA U.S. Leveraged Loan 100 Index.
“The First Trust Senior Loan ETF (CAD-Hedged) is the latest example of our commitment to Canadian investors to developing ETFs that democratize access to asset classes and strategies normally only available to institutional investors,” says Fraser Howell, president & CFO at FT Portfolios Canada Co.
“We are equally pleased to tap the expertise of the Leveraged Finance Investment Team of our affiliate, First Trust Advisors L.P., a group of experienced senior loan and high yield managers in the U.S., to manage the fund,” Howell adds.
The active management structure allows the fund’s portfolio advisor to potentially obtain both attractive risk-adjusted and absolute returns over time.
“While an index-based senior loan ETF principally considers the market value of the debt issuance outstanding in its selection methodology, an actively managed ETF gives us the latitude to utilize our rigorous credit process in evaluating an individual company’s ability to repay its debt, which we believe is paramount to driving attractive risk-adjusted and absolute returns over the long term,” says William Housey, senior vice president and senior portfolio manager for the Leveraged Finance Investment Team of First Trust Advisors.
“Many fixed-income investors are looking for alternative sources of income that have historically performed well when interest rates have increased, such as senior loans, and we believe an actively managed ETF is an ideal way for investors to access a diversified portfolio of senior loans while gaining enhanced transparency and liquidity.”