ETF NEWS - ULTUMUS

Duration Managed MBS

Written by Ultumus | 22 January 2019

USA

First Trust lists duration-managed MBS ETF

First Trust is listing a first-of-a-kind actively managed duration ETF that looks to harvest higher income by investing in long duration mortgage-backed securities. 

The new fund, called the First Trust Long Duration Opportunities ETF (LGOV), will complement the ultra-successful $2.2B First Trust Low Duration Opportunities ETF (LMBS).

 

LGOV will invest in mortgage-related debts, with an aim of building a portfolio with an effective duration of eight years or more, the prospectus indicates. The fund will invest 80% of its assets in investment grade and agency-backed mortgage debt (backed by Fannie Mae, Freddie Mac, etc.). But is also open to investing up to 20% of its assets in non-agency and commercial mortgage debts in order to jack up yield.

Outside its core MBS exposures, LGOV can also engage in sophisticated MBS trades, the prospectus says. These include mortgage dollar rolls and TBA Transactions.

The prospectus leaves scope for the fund to invest in a raft of other financial instruments, including derivatives, ETFs, T-bills and junk bonds.

 

France

Amundi lists SRI EM ETF

Amundi is listing a new emerging markets ETF that places an SRI screen to exclude the usual corporate baddies involved in tobacco, alcohol, weapons, gambling and porn. The Amundi Index MSCI Emerging Markets SRI UCITS ETF DR (EMSRI) will track the MSCI Emerging Markets SRI Net Total Return Index while charging a 0.25% fee.

 

The index includes 180 large cap EM stocks and is market weighted. The index gets 16% of its weight from its biggest holding, Taiwan Semiconductor, in what might strike some investors as an outsized stock bet. As is often the case with SRI screened indexes, there is a strong sector concentration towards financials tech. Companies with office jobs are less likely to trigger ESG exclusion criteria, it seems.   

 

The index factsheet is here.

 

Lyxor lists euro gov’t bond ETF

Lyxor is listing a new euro government bond ETF, that’s been given a French name. The Lyxor PEA Obligations d'Etat Euro UCITS ETF (OBLI) will track the FTSE MTS Mid Price Investment Grade (Ex-CNO) Etrix All Maturity Index. The index measures the performance of the Eurozone’s largest and most widely traded government bonds which have at least two investment grade ratings from the three main credit ratings agencies. The fund will charge 0.40% a year.

 

The index fact sheet is here