First Trust launches bond ETF

Toronto-based FT Portfolios Canada Co. (a.k.a. First Trust) has introduced First Trust Short Duration High Yield Bond Exchange-Traded Fund, which invests primarily in a diversified portfolio of subinvestment-grade debt securities. These securities are rated below investment-grade by Moody’s Investors Service Inc. and Standard & Poor’s Financial Services LLC or have received a similar rating by a designated rating organization. Securities also may be unrated but be considered to be of comparable credit quality to other securities that are below investment-grade. The new First Trust ETF also may invest in senior floating-rate loans, investment-grade debt securities and convertible bonds. The ETF’s aggregate exposure to senior floating-rate loans will be limited to 40% of the ETF’s net asset value. The weighted average effective duration of the securities in First Trust ETF’s portfolio may not exceed three years.

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