First Trust Global Portfolios has launched an active currency ETF targeted at DFMs, wealth managers, advisers and institutional investors.
The First Trust FactorFX Ucits ETF will hold a basket of between 20 to 30 currency pairs in developing and emerging markets through forward FX contracts, futures, money market instruments and short-dated sovereign debt.
“Currency is an asset class, and an extremely liquid one,” said portfolio manager Leonardo DaCosta. “By focusing on the yield differential of currency pairs, the fund can potentially generate total returns in a world of compressed yields, and is a great way to add portfolio diversification.”
The Irish-domiciled ETF, the first of its kind in Europe, will launch on the London Stock Exchange on Tuesday with a TER of 0.75 per cent.
FTGP chief executive Derek Fulton says the ETF provides an alternative to international fixed income, which has historically been associated with higher volatility.
“Our new fund offers investors a way to capture international yield differentials while potentially managing currency volatility without taking on credit or duration risk,” says Fulton. “Currencies also tend to have low correlation to bonds and equities.”