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CI Global Asset Management launched an actively managed fixed income ETF in Canada offering exposure to floating rate securities issued around the world.
The CI Floating Rate Income Fund (CN CFRT) was listed on Toronto Stock Exchange with a management fee of 0.35%, the lowest price among floating rate ETFs in Canada.
Floating rate securities offer coupons that adjust to reflect changes in interest rates. Compared to traditional bonds that pay fixed coupons, this feature makes floating rate securities much less likely to lose value when interest rates rise.
Investors are increasingly looking to take a defensive stance on interest rates as the market expects the Federal Reserve to hike its key rate by half a point at its next two policy meetings.
The ETF replicates the strategy behind CI Floating Rate Income Fund, a mutual fund launched by CI Global in June 2017. This fund generated an average annual return of 3.90% over the three years ending on the first quarter of 2022, outperforming its category for absolute returns over that period. period. This strong performance was achieved despite a difficult period for corporate credit investors due to the economic disruption of the global pandemic and rising interest rates over the past six months.
The fund’s day-to-day operations are overseen by Geof Marshall, Senior Vice President and Principal Portfolio Manager, and Darren Arrowsmith, Vice President and Portfolio Manager. Together, the duo have worked at CI Global for 26 years.
The ETF aims to provide a steady stream of income by investing in higher yielding floating rate debt securities, such as bonds and loans, as well as short term high yield and investment grade bonds and stocks. preferred at variable rates.
Although the fund may invest globally, the majority of its allocation is expected to be directed to issuers located in the United States and Canada.