First Trust Alternative Absolute Return Strategy ETF (FAAR)

Overview

The First Trust Alternative Absolute Return Strategy ETF (FAR) seeks to provide total return. It invests in a combination of equity securities, fixed income instruments, and alternative investments, using a variety of strategies to achieve absolute returns regardless of market conditions.

Reputation and Reliability

First Trust is a well-established ETF provider with a strong reputation in the market, known for offering innovative and actively managed ETFs.

Management Expertise

First Trust has a team of experienced investment professionals managing their ETFs, with expertise in various asset classes and investment strategies.

Goal

The primary investment goal of FAR is to provide total return, employing strategies designed to generate positive returns irrespective of market direction.

Investment Approach and Strategy

Strategy: FAR employs a multi-asset approach, combining stocks, bonds, and alternative investments. It doesn't track a specific index but aims for absolute returns.

Composition The ETF's holdings include a mix of equity securities, fixed income instruments (e.g., bonds), and alternative investments. Specific allocations vary based on market conditions and investment opportunities.

Market Share: FAR's market share within the absolute return ETF category is relatively small compared to larger, more established funds.

Total Net Assets (AUM): 28140000

Key Competitors

• AGFiQ US Market Neutral Anti-Beta ETF (BTAL)
• Cambria Tail Risk ETF (TAIL)
• Simplify US Equity PLUS GB ETF (SPYB)

Competitive Landscape

The absolute return ETF market is competitive, with various funds employing different strategies. FAR competes with funds that focus on market neutrality, tail risk hedging, or other alternative approaches. Its competitive edge relies on First Trust's expertise and approach to combining different asset classes, while its disadvantage could be its smaller size and lower liquidity compared to larger competitors.

Historical Performance: Historical performance data should be obtained from financial data providers like Morningstar or Bloomberg for accurate values.

Benchmark Comparison: The ETF's performance is not directly comparable to a traditional market benchmark due to its absolute return focus. Its performance is best evaluated against a peer group of alternative or absolute return funds.

Expense Ratio: 0.95

Average Trading Volume

FAR's average trading volume is relatively low, which can affect the ease of buying and selling shares.

Bid-Ask Spread

The bid-ask spread may be wider than more liquid ETFs, potentially increasing trading costs.

Market Environment Factors

Economic indicators, interest rates, and market volatility can affect FAR's performance. Its multi-asset strategy aims to navigate different market conditions.

Growth Trajectory

The ETF's growth trajectory depends on its ability to deliver consistent returns and attract investor interest in its alternative investment approach.

Competitive Edge

FAR's competitive advantage lies in First Trust's established brand and active management approach, seeking to provide returns irrespective of market conditions by diversifying across equities, fixed income, and alternative assets. It differentiates itself through a flexible investment strategy and allocation decisions based on market outlook and risk assessment, aiming to reduce overall portfolio volatility. Its strategy may appeal to investors seeking diversification beyond traditional asset classes and reduced correlation with market indices.

Volatility

The ETF's volatility will depend on the volatility of its underlying assets and the effectiveness of its risk management strategies. Due to the alternative investments, volatility can be unpredictable.

Market Risk

FAR is exposed to market risk through its equity and fixed income holdings. Alternative investments may carry their own specific risks depending on their nature.

Ideal Investor Profile

The ideal investor for FAR is someone seeking diversification beyond traditional asset classes and who wants to reduce overall portfolio volatility.

Market Risk

FAR is potentially more suitable for long-term investors or those using tactical allocation strategies rather than passive index followers, as it requires a strong understanding of complex investment concepts.

The First Trust Alternative Absolute Return Strategy ETF aims to provide absolute returns by investing in a diversified portfolio of stocks, bonds, and alternative investments. It is actively managed by First Trust, a reputable ETF provider, and offers investors exposure to a range of asset classes beyond traditional equities and fixed income. The ETF's performance depends on the effectiveness of its investment strategy and market conditions, and it may be more suitable for sophisticated investors with a higher risk tolerance. FAR's low liquidity and higher expense ratio are important considerations for potential investors.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar
• Bloomberg

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Investment decisions should be made based on individual circumstances and consultation with a qualified financial advisor.