What is the underlying index that the FFTI ETF aims to track?

The FFTI ETF aims to track the U.S. Global Sea to Sky Cargo Index, which is composed of the exchange-listed common stock (or depositary receipts) of cargo companies involved in marine shipping, air freight and courier, and port and harbor operations.

How does the FFTI ETF select its holdings?

The Index Provider, a subsidiary of the Adviser, ranks cargo companies based on four factors: cash flow return on invested capital (CFROIC), market capitalization, earnings-to-price ratio, and cash-flow-to-price ratio. The top-ranked companies from different segments (marine shipping/port/harbor and air freight/courier) receive different weightings in the index.

What is the investment strategy of the FFTI ETF?

The FFTI ETF seeks to invest at least 80% of its net assets in cargo companies. It typically uses a replication strategy to invest in all the component securities of the index in the same proportion. However, it may also use a representative sampling strategy when necessary to closely resemble the risk and return characteristics of the index.

What are the geographic exposures of the FFTI ETF?

As of March 31, 2023, the Index had significant exposure to companies in Europe, Japan, China/Hong Kong, and Taiwan. The geographic exposure may change with each reconstitution or based on market movements.

6 min read

By Beqa Bumbeishvili, ETF Insider

What is the FFTI ETF ?

FFTI ETF: Overview

The FFTI ETF, or Fixed Income Fund of Funds ETF, is an actively managed exchange-traded fund that operates as a fund of funds. Unlike passive ETFs that aim to replicate the performance of an index, the FFTI ETF seeks to achieve its investment objective by investing in a portfolio of other ETFs. These underlying ETFs primarily focus on foreign and domestic fixed income securities. The fixed income securities include U.S. Treasuries, investment-grade U.S. bonds, high-yield U.S. bonds (also known as "junk" bonds), U.S. aggregate bonds, municipal bonds, and international government bonds with various maturities and durations.

FFTI ETF Underlying and Exposure: What does it track and how?

The advisor managing the FFTI ETF employs proprietary quantitative models with discretionary implementation to allocate the fund's assets. The process involves ranking five major fixed income asset classes based on the strongest combination of yield spread and price momentum. Yield spread represents the difference between yields on fixed income securities with different maturities, credit ratings, and risk levels. Price momentum, on the other hand, measures the rate of rise or fall in stock prices. The three highest-ranked asset classes are included in the portfolio, while the two lowest-ranked asset classes are excluded. Additionally, any asset class displaying negative momentum is not included in the portfolio, even if it ranks among the top three. To represent the identified asset classes, the advisor utilizes low-cost, index-tracking ETFs that closely track the respective benchmark and maintain sufficient daily trading volume to avoid liquidity issues. This active management process is repeated monthly to adapt to prevailing market conditions.

FFTI overlap What is the FFTI ETF ?

FFTI ETF: Benefits of Investing in this ETF

The FFTI ETF offers several advantages to investors looking to gain exposure to the fixed income market. Firstly, as an actively managed ETF, it provides the potential for outperforming passive ETFs that merely track an index. The discretionary asset allocation allows the fund manager to adjust the portfolio composition based on changing market conditions, potentially optimizing returns. Moreover, by investing in a diversified pool of fixed income securities through other ETFs, the FFTI ETF offers investors broad exposure to various segments of the fixed income market. This diversification can help spread risk and enhance overall portfolio stability, making it suitable for conservative investors seeking a balanced approach to income generation and capital preservation.

FFTI ETF: Considerations before Investing

While the FFTI ETF presents attractive features, investors should be mindful of certain considerations before making investment decisions. Active management, while offering potential benefits, also comes with higher management fees compared to passive ETFs. Therefore, investors should carefully assess the overall cost of investing in the FFTI ETF and weigh it against the expected returns.
Additionally, the ETF's performance will depend significantly on the fund manager's ability to make accurate asset allocation decisions based on the proprietary quantitative models. Investors should evaluate the track record and expertise of the fund manager to gauge the likelihood of achieving consistent performance over time. Considering the fixed income nature of the ETF, investors should also be aware of interest rate risk and credit risk associated with the underlying fixed income securities. Changes in interest rates and credit quality of the underlying bonds may impact the ETF's performance, and investors should align their risk tolerance accordingly.

Conclusion

In conclusion, the FFTI ETF offers investors a unique approach to gain exposure to the fixed income market. Through active management and investment in a diverse range of fixed income securities, this ETF aims to provide potential for outperformance while managing risks. However, investors should thoroughly research and consider their investment objectives, risk tolerance, and the expertise of the fund manager before investing.

Disclaimer: This article is for informational purposes only and does not provide any investment advisory services. Investing in ETFs and financial instruments involves risk, and individuals should consult with a qualified financial advisor before making any investment decisions.

Sources:
[Source 1: The Fund's active management approach]
[Source 2: The advisor's proprietary investment model]
[Source 3: ETF selection and allocation process]
[Source 4: FFTI ETF benefits and considerations]

FFTI ETF issuer
FFTI ETF official page

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FAQ

What is the FFTI ETF?
The FFTI ETF, also known as the U.S. Global Sea to Sky Cargo Index ETF, is an exchange-traded fund that aims to track the performance of marine shipping, air freight and courier, and port and harbor operating companies across the globe in developed or emerging markets.
What is the underlying index that the FFTI ETF aims to track?
The FFTI ETF aims to track the U.S. Global Sea to Sky Cargo Index, which is composed of the exchange-listed common stock (or depositary receipts) of cargo companies involved in marine shipping, air freight and courier, and port and harbor operations.
How does the FFTI ETF select its holdings?
The Index Provider, a subsidiary of the Adviser, ranks cargo companies based on four factors: cash flow return on invested capital (CFROIC), market capitalization, earnings-to-price ratio, and cash-flow-to-price ratio. The top-ranked companies from different segments (marine shipping/port/harbor and air freight/courier) receive different weightings in the index.
What is the investment strategy of the FFTI ETF?
The FFTI ETF seeks to invest at least 80% of its net assets in cargo companies. It typically uses a replication strategy to invest in all the component securities of the index in the same proportion. However, it may also use a representative sampling strategy when necessary to closely resemble the risk and return characteristics of the index.
What are the geographic exposures of the FFTI ETF?
As of March 31, 2023, the Index had significant exposure to companies in Europe, Japan, China/Hong Kong, and Taiwan. The geographic exposure may change with each reconstitution or based on market movements.

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