3 New Fixed-Income ETFs Use Options To Target Higher Income

As investors process shifting trade policies, inflation and geopolitical tensions, First Trust Advisors launches three new Target Income ETFs aimed at boosting income potential while maintaining fixed-income exposure. These actively managed funds each carry a net expense ratio of 0.65% and utilize option strategies to strengthen returns.

Also See: 3 Dividend ETFs to Maximize Passive Income

The three newly launched funds, FT Vest Investment Grade & Target Income ETF LQTI, FT Vest High Yield & Target Income ETF HYTI, and FT Vest 20+ Year Treasury & Target Income ETF LTTI, offer a combination of U.S. Treasury securities with options-driven exposure to specific fixed-income sectors.

LQTI provides investment-grade corporate bond exposure through its underlying ETF, the iShares iBoxx $ Investment Grade Corporate Bond ETF LQD. HYTI targets high-yield corporate bonds via the iShares iBoxx $ High Yield Corporate Bond ETF HYG. LTTI focuses on long-term U.S. Treasury exposure, tied to the iShares 20+ Year Treasury Bond ETF TLT.

Each fund utilizes FLEX options, which are customizable exchange-traded options designed to optimize risk and return. This is in effort to distribute income at an annual rate 5% higher than their underlying ETFs.

With over 160 ETFs listed in the U.S., First Trust continues to expand its roots in the income-focused investing space. One of its flagship funds, the First Trust Preferred Securities & Income ETF FPE, has more than $5 billion in assets under management.

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