The Irish-domiciled First Trust FactorFX Ucits ETF is denominated in USD and has a total expense ratio of 0.75%.
It will be available on the London Stock Exchange from 1 August.
The ETF will hold a basket of between 20 and 30 currency pairs in developing and emerging markets through forward FX contracts, futures, money market instruments and short-dated sovereign debt.
The product goes long on undervalued currencies and higher-yielding currencies, and short on overvalued, lower-yielding currencies, with the aim of delivering total returns by focusing on the yield differential.
An answer to low yields
The ETF is targeted at wealth managers, discretionary fund managers (DFMs), advisers and institutional investors.
“Currency is an asset class, and an extremely liquid one,” said FTGPs’ portfolio manager Leonardo DaCosta, who is responsible for the composition of the ETF’s basket of currencies.
“By focusing on the yield differential of currency pairs, the fund can potentially generate total returns in a world of compressed yields, and is a great way to add portfolio diversification,” DaCosta added.
FTGP is a UK-based affiliate of First Trust Advisors, an ETF provider active in the US since 1991, with current assets under management of $107bn (£81bn, €91bn) at the end of June.
