First Trust Structured Credit Income Opportunities ETF (OTCMKTS:SCIO) is an actively managed exchange-traded fund designed to provide investors with exposure to structured credit markets. The fund is sponsored by First Trust Advisors L.P., a subsidiary of First Trust Portfolios L.P., and seeks to generate attractive risk-adjusted income through investments in collateralized loan obligations (CLOs) and other structured credit instruments.
The ETF primarily allocates capital to senior secured and investment-grade tranches of CLOs, aiming to benefit from the floating-rate nature of underlying corporate loans and the structural credit enhancements within CLO vehicles. In addition to CLO debt tranches, SCIO may invest in CLO equity tranches, structured notes, credit-linked notes and other asset-backed securities, allowing portfolio managers to take advantage of relative-value opportunities across the structured credit spectrum.
With a focus on current income generation, SCIO employs a disciplined, research-driven approach to security selection and risk management. The fund’s portfolio managers draw on First Trust’s fixed-income research teams to conduct in-depth credit analysis, monitor portfolio concentrations and adjust exposures in response to changing market conditions. This active management style distinguishes SCIO from passive index-based fixed-income ETFs.
SCIO offers investors a potential source of diversification within broader equity and bond allocations. By harnessing the expertise of First Trust’s structured credit team, the ETF aims to deliver a combination of income, liquidity and risk control for institutional and individual investors seeking enhanced yield in a low-rate environment. First Trust Portfolios L.P., headquartered in Downers Grove, Illinois, oversees the fund’s administration and distribution.
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