First Trust Bloomberg Emerging Market Democracies ETF (EMDM)

Overview

The First Trust Bloomberg Emerging Market Democracies ETF (EMDM) seeks to track the investment results of the Bloomberg Emerging Market Democracies Index, which is composed of equity securities from emerging market countries that are considered to be democracies based on Bloomberg's proprietary methodology. It offers exposure to a diversified portfolio of emerging market equities with a focus on democratic nations.

Reputation and Reliability

First Trust is a well-established ETF provider with a strong track record and reputation for offering innovative investment solutions.

Management Expertise

First Trust has a team of experienced professionals dedicated to managing and monitoring the performance of their ETFs.

Goal

The ETF aims to provide investment results that correspond generally to the price and yield (before the fundu2019s fees and expenses) of an equity index called the Bloomberg Emerging Market Democracies Index.

Investment Approach and Strategy

Strategy: The ETF tracks the Bloomberg Emerging Market Democracies Index, which is designed to represent the performance of equity securities from emerging market countries that are considered to be democracies.

Composition The ETF holds a diversified portfolio of stocks from emerging market countries classified as democracies by Bloomberg. These countries include those in Asia, Latin America, and Eastern Europe.

Market Share: EMDM holds a relatively small market share within the broader emerging markets ETF category.

Total Net Assets (AUM): 197385272.68

Key Competitors

• iShares Core MSCI Emerging Markets ETF (IEMG)
• Vanguard FTSE Emerging Markets ETF (VWO)
• Schwab Emerging Markets Equity ETF (SCHE)

Competitive Landscape

The emerging markets ETF space is dominated by a few large players like IEMG and VWO, offering broad market exposure. EMDM differentiates itself through its focus on democratic nations within the emerging markets, which may appeal to investors with specific governance preferences. However, it faces the challenge of a smaller AUM and possibly higher expense ratio compared to the larger, more diversified ETFs.

Historical Performance: Historical performance varies with market conditions and is available in the fund's factsheet.

Benchmark Comparison: The ETF's performance should be compared against the Bloomberg Emerging Market Democracies Index to evaluate its tracking effectiveness.

Expense Ratio: 0.7

Average Trading Volume

The average trading volume is moderate, which can impact trading costs for larger transactions.

Bid-Ask Spread

The bid-ask spread is generally reasonable but can widen during periods of market volatility.

Market Environment Factors

Economic growth in emerging markets, political stability (specifically in democratic nations), commodity prices, and currency fluctuations significantly impact EMDM's performance.

Growth Trajectory

EMDM's growth is tied to the overall performance of emerging market equities, particularly those in democratic countries. Changes in the underlying index methodology can influence the fund's holdings and performance.

Competitive Edge

EMDM's competitive edge lies in its unique focus on emerging market democracies, offering a niche investment strategy based on governance factors. This focus can attract socially responsible investors who prioritize democratic values. This governance filter might result in a portfolio with potentially lower political risk and potentially higher long-term sustainable growth. However, this also limits the fund's universe and could lead to higher concentration risks.

Volatility

As an emerging market ETF, EMDM is subject to higher volatility than developed market ETFs due to political and economic uncertainties in the underlying countries.

Market Risk

Market risk includes potential losses due to broad market declines, currency fluctuations, and geopolitical events specific to emerging market countries.

Ideal Investor Profile

EMDM is suitable for investors seeking exposure to emerging market equities with a preference for democratic governance. It is appropriate for investors who understand the risks associated with emerging markets and have a long-term investment horizon.

Market Risk

EMDM is best suited for long-term investors who are comfortable with the higher risk and volatility of emerging markets and who value a focus on democratic nations.

The First Trust Bloomberg Emerging Market Democracies ETF (EMDM) provides targeted exposure to emerging market equities screened for democratic governance. Its unique focus sets it apart from broad-based emerging market ETFs. However, it has a higher expense ratio and lower AUM. Potential investors should consider the risks and rewards of its specialized strategy and consider that political changes could negatively affect the underlying index.

Data Sources:

• First Trust Website
• Bloomberg
• ETF.com

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Investment decisions should be based on individual circumstances and the advice of a qualified financial advisor. Market share percentages are based on approximate data and may vary.