The First Trust Preferred Securities and Income ETF (the Fund) seeks total return and to provide current income by investing primarily in preferred securities and income-producing debt securities, including corporate bonds, high-yield securities and convertible securities.
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Under normal market conditions, at least 80% of the Fund’s net assets, including investment borrowings, will be allocated to these asset classes.
Stonebridge Advisors LLC (Stonebridge), a Registered Investment Advisor, serves as the Fund’s sub-advisor and manages its portfolio.
Commenting on the move, Scott Fleming, President and Chief Investment Officer of Stonebridge said: "We believe that preferred securities are an important component of a well-diversified portfolio. This Fund’s structure as an actively managed ETF gives us the opportunity to manage the Fund not only to seek income and total return, but to react to market conditions and work to safeguard capital during changes in the market, especially if interest rates start to rise."
Further, First Trust and Stonebridge believes that the preferred securities have the potential to enhance an investor’s overall return, deliver meaningful diversification and decrease portfolio volatility because the historical correlations of preferred securities to other asset classes have been low.
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By GlobalData"With the current opportunity in the preferred securities space, the Fund may allow investors to potentially earn high yields while mitigating risk in various market environments," added Robert Carey, CFA, chief market strategist of First Trust.
