On Friday, First Trust rolled out two actively managed municipal bond ETFs targeting securities with shorter durations. The First Trust Short Duration Managed Municipal ETF (FSMB) and the First Trust Ultra Short Duration Municipal ETF (FUMB) could appeal to investors in a time of rising rates, since bonds with shorter durations are less affected by changes in interest rates.
FSMB comes with an expense ratio of 0.45%, while FUMB charges 0.35%. The two funds list on the NYSE Arca.
While FSMB typically has an average weighted duration of one to three years, FUMB’s average weighted duration is less than one year. Both funds will target mainly investment-grade debt, with FSMB able to invest up to 35% of its portfolio in high-yield debt, and FUMB’s portfolio capped at a 20% allocation, according to the prospectus.
Six municipal bond ETFs have made their debut in 2018, most recently two funds from J.P. Morgan in October.
Contact Heather Bell at [email protected]