German fund manager DWS has launched the Xtrackers Floating Rate Notes Active UCITS ETF (XFLN), the first actively managed exchange-traded fund targeting euro FRNs.
The Irish-domiciled and Deutsche Börse-listed fund carries a total expense ratio (TER) of 0.12% and aims to beat the iBoxx EUR FRN Investment Grade 0–3Y Capped index.
XFLN is designed for investors looking for a slightly higher return than conventional money market funds without taking on significant interest rate risks.
“Floating rate notes can be well suited for this purpose because their interest rates are adjusted regularly and price fluctuations remain low,” said Simon Klein, global head of Xtrackers sales at DWS.
“With our active ETF, we want to make this asset class more accessible to investors and tap into additional sources of return, for example by adding international bonds or participating more actively in the primary market compared to conventional floating rate note ETFs on the market,” Klein said.
Our view
David Batchelor, senior analyst at QuotedData, said: “Another day, another fixed interest active ETF launch, this time the Xtrackers Floating Rate Notes UCITS ETF. Although launched at the back end of last year, the English media release for this German-listed fund has just been issued. This is the first of its kind, as an actively managed UCITS ETF on floating rate bonds. These instruments give investors just a tiny bit more spice for their low-risk capital than money market funds; the credit duration of the reference index is 1.2 years. This fund gives the potential for a bit more return on top, given the active management.”
