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First Trust launches first actively managed Senior Loan ETF in Canada


FT Portfolios Canada has launched common and advisor class units of the First Trust Senior Loan ETF (CAD-Hedged).

The First Trust Senior Loan ETF (CAD-Hedged) 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.
The ETF will primarily invest in a portfolio of senior floating rate loans which are generally rated at or below BB+ by Standard & Poors, or Ba1 or less by Moody’s Investor Services, or a similar rating by an approved credit rating organisation.
The fund attempts to outperform the S&P/LSTA US Leveraged Loan 100 Index.
“First Trust Canada is pleased to offer Canadians the first actively managed senior loan ETF. We believe an allocation to senior loans may address two issues critical to investors in today’s low interest rate environment: the search for yield and the desire for protection against rising interest rates. The First Trust Senior Loan ETF (CAD-Hedged) is the latest example of our commitment to Canadian investors to developing ETFs that democratise access to asset classes and strategies normally only available to institutional investors,” says Fraser Howell, president and chief financial officer at FT Portfolios Canada. “We are equally pleased to tap the expertise of the leveraged finance investment team of our affiliate, First Trust Advisors, a group of experienced senior loan and high yield managers in the US, to manage the fund.”
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 utilise 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.”

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