Fixed income giant M&G is entering the rapidly expanding active ETF market with the launch of three exchange-traded funds covering UK and US government bonds.

The Dublin-based and London-listed M&G UK Index-Linked Gilts Active UCITS ETF (MUKL), M&G UK Gilts Active UCITS ETF (MGIL) and M&G US Treasury Bond Active UCITS ETF (MUSA) are backed by a £350m investment from M&G’s Life business on behalf of its multi-asset funds range.

They will be managed by institutional bond fund managers Miles Tym and Rob Burrows who have also run the £369m M&G Gilt & Fixed Interest Income and the £71m M&G Index-Linked Bond open-ended funds for five years. In that time their assets have fallen from £593m and £207m respectively as their asset class has struggled with UK interest rates that have shot up from an all-time low of 0.1% to peak at 5.25% last year before falling to 4%.

The new active ETFs will be low cost with an annual ongoing charge of 0.15%. They will seek to generate total returns from capital and income in excess of their respective markets over five years.

The US Treasury ETF will also be listed on stock exchanges in France, Germany, Italy, Spain

M&G also plans to launch the M&G Global Maxima Equity UCITS ETF run by systematic equity specialists Gautam Samarth and Michael Cook.

M&G Investments chief executive Joseph Pinto said it was a “strategic milestone” for the FTSE 100 fund manager combining “precise portfolio construction with accessibility and efficiency for investors

“Our longstanding track record in delivering alpha through disciplined, research-driven strategies makes us uniquely position to translate decades of active management expertise into the active ETF structure.”

M&G Life chief investment officer Ciaran Mulligan was excited to be supporting the launches of funds covering different bond markets. “This approach allows our multi-asset portfolios to tap directly into the alpha generated by our active strategies, while keeping costs low for our customers.”