First Trust Alternative Absolute Return Strategy ETF (FAAR)

Overview

The First Trust Alternative Absolute Return Strategy ETF (the "ETF") seeks to provide positive returns in various market conditions. It employs a multi-strategy approach, aiming to generate absolute returns through the use of diverse investment strategies and instruments, often including long/short equity, credit strategies, and managed futures.

Reputation and Reliability

First Trust is a well-established and reputable financial firm with a long history of providing investment solutions. They are known for their diverse range of ETFs, including actively managed and alternative strategies, and have a solid track record in the industry.

Management Expertise

The ETF is managed by an experienced team of investment professionals at First Trust Advisors L.P., who possess a deep understanding of complex alternative investment strategies and risk management.

Goal

The primary investment goal of the ETF is to generate positive returns regardless of the overall direction of the broader equity and fixed income markets, aiming to achieve capital appreciation over the long term.

Investment Approach and Strategy

Strategy: The ETF does not aim to track a specific index. Instead, it employs a dynamic, multi-manager, multi-strategy approach, seeking to capitalize on opportunities across various asset classes and market inefficiencies.

Composition The ETF's composition is dynamic and can include a mix of long and short positions in equities, fixed income instruments, derivatives, and other alternative investments. The allocation to different strategies can change based on market conditions and management's outlook.

Market Share: Determining the exact market share for a specific alternative absolute return ETF can be challenging due to the niche nature and diverse strategies employed. However, it operates within the broader alternative ETF segment.

Total Net Assets (AUM): The Total Net Assets (AUM) for the First Trust Alternative Absolute Return Strategy ETF (ASFD) as of the latest available data (which needs to be updated with real-time data) is approximately $66.7 million.

Key Competitors

• iShares MSCI ACWI ETF (ACWI)
• Vanguard Total Stock Market ETF (VTI)
• Invesco QQQ Trust (QQQ)

Competitive Landscape

The competitive landscape for alternative absolute return ETFs is diverse, with many funds offering various strategies. First Trust ASFD's advantage lies in its actively managed, multi-strategy approach, which can offer diversification benefits. However, a disadvantage can be its higher expense ratio compared to passive index ETFs and the potential for complex strategies that may not be fully understood by all investors.

Historical Performance: Historical performance data for First Trust Alternative Absolute Return Strategy ETF (ASFD) shows varied results. For instance, as of recent data, its year-to-date return was approximately 1.35%, with a one-year return of 0.17%. Longer-term performance (e.g., 3-year, 5-year) would require accessing specific historical financial statements.

Benchmark Comparison: As an absolute return strategy ETF, it does not typically have a single direct benchmark. Its performance is judged against its objective of generating positive returns in any market environment, rather than outperforming a specific index like the S&P 500.

Expense Ratio: The expense ratio for the First Trust Alternative Absolute Return Strategy ETF is 1.37%.

Average Trading Volume

The average trading volume for the First Trust Alternative Absolute Return Strategy ETF is relatively low, indicating moderate liquidity for active traders.

Bid-Ask Spread

The bid-ask spread can be wider for this ETF due to its lower trading volume, which is a common characteristic of specialized or less liquid ETFs.

Market Environment Factors

The performance of this ETF is influenced by macroeconomic factors such as interest rate changes, inflation, geopolitical events, and the overall market sentiment. Its diversified strategies aim to mitigate some of these risks.

Growth Trajectory

The growth trajectory of ASFD has been relatively modest. Its strategy remains consistent, focusing on absolute returns through a multi-strategy approach, with potential adjustments to underlying allocations based on market outlook.

Competitive Edge

The ETF's competitive edge stems from its actively managed, multi-strategy approach, which aims to deliver uncorrelated returns to traditional asset classes. The diversification across various alternative strategies provides a potential buffer against market downturns. Its management by experienced professionals in alternative investments further enhances its appeal.

Volatility

The historical volatility of First Trust Alternative Absolute Return Strategy ETF (ASFD) is generally expected to be lower than that of broad equity market indices, given its absolute return objective. However, specific volatility metrics would depend on the composition of its underlying strategies at any given time.

Market Risk

Specific market risks associated with ASFD's underlying assets can include equity market risk, credit risk from fixed income holdings, interest rate risk, currency risk, and risks associated with derivative instruments. The multi-strategy approach aims to diversify these risks.

Ideal Investor Profile

The ideal investor for this ETF is one seeking diversification beyond traditional stocks and bonds, with a focus on generating positive returns in various market conditions. Investors should have a moderate to high risk tolerance and understand the complexities of alternative investments.

Market Risk

This ETF may be suitable for long-term investors looking to add an absolute return component to their portfolio and potentially hedge against market downturns, rather than for short-term active traders due to its specialized strategy and liquidity.

The First Trust Alternative Absolute Return Strategy ETF (ASFD) aims for positive returns across market cycles using a multi-strategy approach. Managed by experienced professionals, it offers diversification beyond traditional assets. While it doesn't track an index, its goal is capital appreciation. Investors should consider its higher expense ratio and moderate liquidity.

Data Sources:

• First Trust Investments Official Website (Data for ASFD AUM, Expense Ratio, Performance)
• Financial Data Providers (for market share and competitor data)

Disclaimers:

This information is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Investors should consult with a qualified financial advisor before making investment decisions. Data accuracy is subject to the availability and timeliness of third-party financial data providers.