Newfleet Asset Management, a US-based investment advisor and affiliate of Virtus Investment Partners, has entered the exchange-traded fund space with the launch of an actively managed multi-sector bond ETF. Listed on the NYSE Arca, the Virtus Newfleet Multi-Sector Unconstrained Bond ETF (NFLT) aims to deliver a high level of current income while also pursuing capital appreciation.

Newfleet has launched a multi-sector unconstrained bond ETF which can invest globally.

The fund uses a multi-faceted approach to bond selection starting with a top-down relative value assessment to discern which sectors to over- or under-weight. At the same time, the managers conduct an examination of likely global interest rate movements in the coming months. The goal here is to establish target duration averages and manage the distribution of duration risk within the final portfolio.

The second stage of the investment process involves bottom-up fundamental research into the quality of each issue, including assessment of cash-flows, company management, issue structure and technical market conditions, focusing on relative valuations.

The portfolio is then constructed with an emphasis on diversification by investing in 14 different bond sectors, while also utilising the experience of the fund managers through tactical weightings to sectors and issuers where a high-conviction of outperformance is held. As explained in the fund’s prospectus: “While NFLT embraces the virtues of diversification, the lack of formal sector, industry, or country limitations means that the team can express its highest conviction ideas.” There is also no restriction on below-investment grade securities or non-US debt.

The fund has a total expense ratio of 0.80%.