First Trust Managed Futures Strategy Fund (FMF)

Overview

The First Trust Managed Futures Strategy Fund (FTSM) seeks long-term capital appreciation by investing in commodity futures contracts and other financial instruments. It employs a quantitative, rules-based approach to identify and capitalize on trends in the futures markets. The fund does not invest directly in physical commodities.

Reputation and Reliability

First Trust is a well-established investment management firm known for its diverse ETF offerings and commitment to providing innovative investment solutions.

Management Expertise

First Trust's management team comprises experienced professionals with expertise in quantitative analysis, portfolio management, and futures markets.

Goal

To seek long-term capital appreciation.

Investment Approach and Strategy

Strategy: The fund does not track a specific index but uses a managed futures strategy that involves systematically investing in futures contracts across various sectors.

Composition The ETF primarily holds futures contracts on various commodities, currencies, interest rates, and equity indices. It also holds cash and cash equivalents.

Market Share: The fund's market share in the managed futures ETF category is not dominant but significant due to early market entry. This figure fluctuates based on performance and investor interest.

Total Net Assets (AUM): 41300000

Key Competitors

• DBIQ (DBIQ)
• WisdomTree Managed Futures Strategy Fund (WTMF)
• KFA Mount Lucas Index Strategy ETF (KMLM)

Competitive Landscape

The managed futures ETF market is relatively niche. FTSM benefits from a well-known issuer and established track record, yet faces competition from ETFs with lower expense ratios or different managed futures approaches. FTSM's higher expense ratio may be a disadvantage, but its historical performance may attract investors.

Historical Performance: Historical performance data is needed to assess returns over various periods.

Benchmark Comparison: The ETF does not have a direct benchmark index due to its active managed futures strategy. Performance is typically compared against a benchmark of managed futures strategies or hedge fund indices.

Expense Ratio: 0.95

Average Trading Volume

The average trading volume of FTSM is moderate, which may impact the ease of buying and selling large positions.

Bid-Ask Spread

The bid-ask spread of FTSM is variable depending on market conditions and trading volume; it is essential to check the current spread before trading.

Market Environment Factors

Economic indicators like inflation, interest rates, and economic growth can affect the ETF. Geopolitical events, supply chain issues and commodity price volatility all affect the fund's performance.

Growth Trajectory

Growth trends depend on investor appetite for alternative investments and the fund's ability to generate positive returns in varying market conditions. Changes to strategy are implemented by the fund managers to adapt to the environment.

Competitive Edge

FTSM benefits from First Trust's reputation and distribution network. The ETF uses a systematic, rules-based approach to capture trends in the futures markets, which helps to mitigate human bias. The fund's broad diversification across various futures contracts can reduce risk, and it offers access to managed futures strategies to retail investors. It offers a level of transparency, lacking in traditional hedge funds, by being an ETF.

Volatility

The ETF's volatility is dependent on the volatility of the futures markets and the fund's ability to manage risk. Managed futures can be volatile during periods of rapid market changes.

Market Risk

The fund is exposed to market risks associated with commodities, currencies, interest rates, and equity indices. The fund's success depends on the accurate prediction of market trends.

Ideal Investor Profile

Investors seeking diversification, inflation hedging, or a potentially uncorrelated return stream may find FTSM appealing. The ideal investor is comfortable with moderate volatility and a complex investment strategy.

Market Risk

The fund can be suitable for long-term investors seeking portfolio diversification or active traders looking to capitalize on short-term trends in the futures markets. It may not be ideal for passive index followers.

First Trust Managed Futures Strategy Fund (FTSM) offers access to a managed futures strategy through an ETF structure. It aims for long-term capital appreciation through systematic investment in futures contracts. This fund suits investors seeking diversification and inflation hedging, who are comfortable with a complex and potentially volatile strategy. Its performance is dependent on the fund's ability to correctly identify market trends and manage risk effectively. FTSM's expense ratio should be considered relative to its potential returns and competitor offerings.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

The information provided is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.