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Natixis Loomis Sayles Short Duration Income ETF (LSST)

Natixis Loomis Sayles Short Duration Income ETF seeks current income consistent with preservation of capital

ETF Quick Facts

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  • Ticker: LSST
  • Benchmark: Bloomberg Barclays US Government/Credit 1-3 Year Index
  • Inception Date: 12/27/2017
  • Primary Listing Exchange: NYSE Arca
  • Cusip: 63873X208
  • Gross Expense Ratio: 87 basis points
  • Net Expense Ratio: 38 basis points1

Highlights

  • The ETF seeks to outperform the Bloomberg Barclays US Government/Credit 1-3 Year Index with benchmark like volatility and a low tracking error
  • Active management and a shorter duration profile in a portfolio may lead to better performance in a rising rate environment
  • The ETF is run by a deeply experienced portfolio management team, with an average of over 33 years of industry experience and 18 years at Loomis Sayles
  • Portfolio decisions are made in terms of the relative positioning to the benchmark; the team will invest where risk is warranted. The team seeks to create a portfolio that is diversified across sector, industry and security to help effectively manage risk

Why an Active Short Duration ETF?

  • Short duration strategies can help provide additional yield through positions in credit and securitized sectors. These positions may introduce additional risk but may also help limit interest rate risk and spread duration
  • The ETF can be used as a portfolio building block in a diversified portfolio, or as an alternative to money market funds and ultra-short duration bond funds
  • The ETF provides a vehicle to gain access to Loomis Sayles active management, proprietary credit and securitized research, and quantitative risk management

Investment Philosophy and Process

  • Utilizes a dynamic investment process combining bottom-up security selection with top-down macroeconomic analysis
  • Sector allocation decisions use the Global Asset Allocation Team (GAAT) input which provides views on global interest rates, inflation, economic activity and asset class performance under various economic conditions
  • Bottom-up research helps identify opportunities where there are inconsistencies between fundamentals and market valuations for an issuer or issue
  • Proprietary risk factor tools and risk reports are used to actively manage portfolio risk

Investment Strategy Guidelines

  • The investment universe includes US Treasurys, agencies, mortgage-backed securities (MBS), asset-backed securities (ABS), commercial mortgage-backed securities (CMBS), US and non-US domiciled investment grade corporate bonds and non-investment-grade debt
  • All investments must be US dollar denominated
  • Securities rated below investment grade are limited to 15% of the portfolio at the time of purchase
  • Duration is managed within a narrow range to the benchmark

About Risk

The fund is new with a limited operating history. Exchange-Traded Funds (ETFs) trade like stocks, are subject to investment risk, and will fluctuate in market value. Unlike mutual funds, ETF shares are not individually redeemable directly with the fund and are bought and sold at market price, which may be higher or lower than the ETF's net asset value (NAV). Transactions in shares of ETFs will result in brokerage commissions, which will reduce returns. Unlike typical exchange-traded funds, there are no indexes that the fund attempts to track or replicate. Thus, the ability of the fund to achieve its objectives will depend on the effectiveness of the portfolio manager. There is no assurance that the investment process will consistently lead to successful investing. Fixed income securities may carry one or more of the following risks: credit, interest rate (as interest rates rise bond prices usually fall), inflation and liquidity. Below investment grade fixed income securities may be subject to greater risks (including the risk of default) than other fixed ​income securities. Foreign and emerging market securities may be subject to greater political, economic, environmental, credit, currency and information risks. Foreign securities may be subject to higher volatility than U.S. securities, due to varying degrees of regulation and limited liquidity. These risks are magnified in emerging markets. Interest rate risk is a major risk to all bondholders. As rates rise, existing bonds that offer a lower rate of return decline in value because newly issued bonds that pay higher rates are more attractive to investors.

There is no guarantee that the investment objective will be realized or that the strategy will generate positive or excess returns. Diversification does not ensure a profit or guarantee against a loss. Any investment that has the possibility for profits also has the possibility of losses.

1 This arrangement is set to expire on 4/30/19. When an expense limit has not been exceeded, the fund may have similar expense ratios and/or yields. Net Expense Ratio refers to the limitation on expenses exclusive of brokerage expenses, interest expense, taxes, acquired fund fees and expenses, organizational and extraordinary expenses, such as litigation and information expenses and will expire as indicated.