Daily ETF Watch: Absolute Return Fund Filed

Daily ETF Watch: Absolute Return Fund Filed

First Trust files for actively managed absolute-return ETF that will target commodities.

Reviewed by: Heather Bell
Edited by: Heather Bell

First Trust has filed for another actively managed ETF. The First Trust Alternative Absolute Return Strategy ETF seems very similar to the actively managed $166 million First Trust Global Tactical Commodity Strategy ETF (FTGC | C), which launched in 2013, in that it seeks to invest in commodity futures, but the proposed fund will be able to hold both long and short positions.

Like FTGC, up to 25% of the proposed fund will be invested in a subsidiary based in the Cayman Islands, which conveys certain tax advantages. The subsidiary will represent the commodities futures portion of the portfolio, while the rest of the fund’s assets will be invested in short-term debt, money market funds and other cash-like investments.

With the commodities space struggling, due in no small part to the dramatic decline in oil prices, there’s been increased interest in actively managed commodity futures ETFs. Elkhorn and Van Eck have both filed for such funds over the past few months. However, First Trust already went that route with the launch of FTGC; its latest filing stands out because of the long/short component.

The filing notes that the ETF will list on the Nasdaq, but it does not include a ticker or expense ratio.

Contact Heather Bell at [email protected].

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.