New ETF Targets Long Duration Securities

January 23, 2019

Today, First Trust added to its lineup of fixed-income ETFs that address the issue of duration. Most of those funds target securities of shorter-duration securities, but the First Trust Long Duration Opportunities ETF (LGOV) implements a long-duration strategy.

The fund comes with an expense ratio of 0.65% and lists on the NYSE Arca.

According to the prospectus, the fund is actively managed, and LGOV’s managers will typically target a weighted average effective duration of eight years or longer. The fund will primarily invest in investment-grade securities issued by the U.S. government or its agencies, including Treasury debt and mortgage-backed securities.

The managers will use top-down analysis of market fundamentals to determine sector weightings, and then a bottom-up analysis at the individual security level to determine the tilts of the various subsectors within the portfolio. The document notes the managers will conduct regular analysis of the portfolio’s holdings and risk factors.

All of First Trust’s 17 fixed-income ETFs are actively managed.

Contact Heather Bell at [email protected]

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