First Asset's Fixed Income ETFs aim to address some of your top fixed income investing concerns:
1. Rising Interest Rates
Shortening duration is one of the most prudent tactics to employ if concerns of rising interest rates are paramount. Several of our fixed income ETFs offer short duration positioning or have the ability to tactically manage duration risks. Notably, FSB, FIG, FGB and BXF.
2. Volatile Bond Yields
Volatile bond yields can translate into periods of negative returns for passively managed bond mandates. Our actively managed fixed income ETFs, FSB and FIG, are managed by an experienced fixed income team at Marret Asset Management, who have developed a disciplined and effective approach aimed at turning volatile yield environments into alpha generating opportunities.
3. Widening Credit Spreads
With government bond yields having been low for such an extended period of time, investors have gravitated to higher yielding segments of the fixed income market. As a result, credit spread risk should be on every bond investor’s mind. Core bond mandates that have the ability to hedge this risk are vitally important, such as FSB and FIG. Alternatively, allocations to FGB and BXF, which provide government bond exposure are good ways to ensure that widening credit spreads don’t hamper your bond returns.
4. Premium Bonds in Taxable Accounts
Investors who own premium bonds have to pay tax on the high coupon distributions while incurring capital losses as the bonds mature. FGB, a fixed income ETF in our corporate class structure, takes advantage of expense and tax sharing opportunities available within such a structure, as well as offering distributions in the form of primarily return of capital. BXF achieves tax efficiency through the purchase of strip bonds priced at discounts to their par value. They mature at par, and the gain earned is the difference between the discounted purchase price and their par value at maturity. Unlike a premium bond, the return is identical to its yield to maturity thus making strip bonds more efficient in a taxable account.
This communication is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase the First Asset ETFs described herein and is not intended to provide specific financial, investment, tax, legal or accounting advice, and should not be relied upon in that regard. Investors should seek the advice of professionals, as appropriate, regarding any particular investment and/or trading strategy, which should be evaluated relative to each individual’s circumstances, as these investments may not be suitable for all investors. Some conditions apply. Commissions, management fees and expenses all may be associated with investments in ETFs. Please read the prospectus before investing. ETFs are not guaranteed, their values change frequently and past performance may not be repeated.
Fixed Income ETF Opportunities
Actively Managed ETFs
Managed by Marret Asset Management
Low Cost, Index Tracking ETFs
Indexed to FTSE TMX