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Alternative Market Briefing

First Trust Advisors launches Morningstar Managed Futures Strategy Fund

Monday, August 19, 2013

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Ryan Issakainen
Bailey McCann, Opalesque New York:

First Trust Advisors is launching a new managed futures ETF tracking the Morningstar Diversified Futures IndexSM. Managed futures have been successfully implemented by institutional investors for nearly three decades, but have been typically offered in hedge funds or private accounts until recently. The company seeks to make managed futures more accessible to retail investors through this ETF.

The fund provides exposure, through a wholly-owned Cayman Islands subsidiary, to commodities, currencies, and equities through a long, short or flat futures strategy. The fund seeks to achieve positive returns that are not directly correlated to broad market equity or fixed income returns.

"As an actively managed product we'll be able to choose when we roll from one contract to another in an effort to outperform our benchmark," Ryan Issakainen, ETF Strategist of First Trust, tells Opalesque.

He notes that advisors may opt for this ETF over managed futures mutual funds as part of a more actively managed portfolio. Because the product goes both long and short, with an actively managed strategy Issakainen says that the ETF can provide for a diversifier and depending on the goals of a given portfolio, may do so at less of a load than a managed futures mutual fund.

"You don’t own managed futures because they do well from an absolute standpoint all the time. They can perform well however, when some of the tradition......................

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