First Trust to launch range of income ETFs in Canada

Apr 1st, 2013 | By | Category: Alternatives / Multi-Asset

First Trust Advisors, an investment management firm perhaps best known for its range of AlphaDEX ETFs, has filed a preliminary prospectus with the securities regulatory authorities in Canada for its first suite of Canadian domiciled exchange-traded funds (ETFs).

First Trust to launch range of income ETFs in Canada

First Trust plans to launch a range of income ETFs in Canada.

The US-headquartered firm also recently revealed plans to expand into Europe, to be kicked off with the launch of three AlphaDEX ETFs on the London Stock Exchange, subject to regulatory approval.

First Trust specialises in quantitative investing and oversees more than $67 billion in global assets, including more than $9 billion across 90 ETFs. The majority of the firm’s ETF assets are linked to AlphaDEX indices.

AlphaDEX indices follow an active alternatively-weighted rules-based approach – known in the industry as ‘smart beta’ – which aims to deliver higher long-term returns and lower volatility than conventional market cap-weighted indices.

The Canadian regulatory filing outlined five ETFs, across equities and fixed income. They are:

First Trust AlphaDEX Canadian Dividend Plus ETF
Seeks to provide exposure to the performance of a portfolio of higher yielding Canadian dividend paying stocks. In addition, the ETF will, from time to time, write covered call options on a portion of the portfolio in order to produce additional income.

First Trust AlphaDEX US Dividend Plus ETF (CAD-Hedged)
Seeks to provide currency hedged exposure to the performance of a portfolio of higher yielding US dividend paying stocks. In addition, the fund will, from time to time, write covered call options on a portion of the portfolio in order to produce additional income.

First Trust AlphaDEX Emerging Market Dividend ETF (CAD-Hedged)
Seeks to provide currency hedged exposure to the performance of a portfolio of dividend paying equity securities domiciled in the emerging markets.

First Trust AlphaDEX Global Energy Income Plus ETF (CAD-Hedged)
Seeks to provide currency hedged exposure to higher yielding energy issuers that are involved in the crude oil and natural gas industries. The fund will primarily invest in common shares and ADRs of energy issuers listed on major US stock exchanges (NYSE, Nasdaq). In addition, the fund will, from time to time, write covered call options on a portion of the portfolio in order to produce additional income.

First Trust Senior Loan ETF (CAD-Hedged)
Seeks to provide a high level of current income by investing in a diversified portfolio of senior floating rate loans and debt securities, with capital appreciation as a secondary objective. The fund, which will be currency hedged, will primarily invest in a portfolio of senior floating rate loans which are generally rated at or below BB+ by Standard & Poors, or Ba1 or less by Moody’s, or a similar rating by an approved credit rating organisation.

Once approved, the funds will be listed on the Toronto Stock Exchange.

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