Invesco has launched three low cost exchange-traded funds (ETFs) on floating rate notes (FRNs).
The new ETFs aim to deliver the returns of their respective benchmark indices and fewer fees, by investing in the underlying constituents.
Meanwhile, the bonds in the index must have a minimum issuance of $500 million (or €500 million) to ensure liquidity.
Additionally, they must be removed after they have been in issuance for two and a half years in order to ensure that they are still actively traded.
As well as this, they must have at least two and a half years of maturity when they are issued.
The ETFs are for investors who what passive exposure to FRNs, an asset class seeing increased demand from investors concerned about rising interest rates.
In 2017, 20 percent of the flows into European fixed income ETFs went into FRN ETFs, and 55 percent in Q1 2018.
Syms concluded: “We believe that making even simple improvements to a standard FRN index has the potential to deliver superior results for investors while also making them more efficient to replicate.”
He added: “With these ETFs, we continue to build out our range of low cost passive fixed income ETFs following the launch of our broad investment grade and hard currency emerging market ETFs towards the end of last year.”
