ETF Watch: First Trust Files Active Vol Funds

The company plans two funds that will target stocks with low expected volatility.
Reviewed by: Staff
Edited by: Staff

First Trust has filed for two actively managed ETFs that will target stocks expected to have low volatility levels going forward. The First Trust Horizon Managed Volatility Domestic ETF and the First Trust Horizon Managed Volatility Developed International ETF will both be managed by Horizon Investments and are slated to list on the NYSE Arca exchange.

The prospectus notes for both funds that the strategy of investing in stocks with low expected volatility is based on the idea that such stocks will participate in upside performance in a rising market but offer less downside risk if markets go down.

The domestic fund will invest in 50-75 U.S. large-cap stocks based on their volatility forecasts, while the international ETF will invest in 100-200 large- and midcap securities from developed markets. According to the prospectus, the funds’ approaches are primarily quantitative, but managers have some room for discretion.

The filing did not include tickers or expense ratios.

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