First Trust Advisors has announced the launch of a new actively managed ETF, the First Trust Multi-Strategy Alternative ETF (NYSE Arca: LALT). The fund seeks to provide long-term total return.
The firm writes that the fund will primarily gain exposure to alternative asset categories and strategies (“alternatives”) by investing in ETPs, including ETFs, exchange-traded notes and trusts backed by physical commodities or currencies.
Alternative investment strategies (categorised as those other than traditional equity, fixed income and cash) typically allocate capital based on investment approaches other than a “long-only” approach, the firm says. Exposure to these alternative asset categories and investment strategies may help diversify risk, enhance returns or generate higher yield than traditional investments.
“After a difficult year for both stocks and bonds, it’s no surprise that demand for alternatives has grown stronger,” says Ryan Issakainen, CFA, Senior Vice President and ETF Strategist at First Trust. “We believe this ETF may been an effective tool for investment professionals seeking to diversify client portfolios while also potentially generating returns from multiple alternative risk premiums in the years ahead.”
LALT seeks to provide lower correlation and more diversified risk exposures over various market cycles as compared to traditional equity and fixed income benchmarks by investing in alternative asset categories and strategies including, but not limited to, the following: hedged equity; long/short; event driven; managed futures; commodities; real estate; opportunistic fixed income; relative value; currencies; and global macro. It is important to note that diversification does not guarantee a profit or protect against loss, the firm writes.
