First Trust Municipal High Income ETF (FMHI)

Overview

The First Trust Municipal High Income ETF (FMHI) seeks to provide current income exempt from federal income tax by investing primarily in municipal securities. It focuses on high-yield municipal bonds, typically with lower credit ratings.

Reputation and Reliability

First Trust is a well-established ETF issuer with a reputation for providing innovative investment solutions.

Management Expertise

First Trust has a dedicated team of investment professionals experienced in managing fixed-income and municipal bond portfolios.

Goal

To provide current income exempt from federal income tax.

Investment Approach and Strategy

Strategy: The ETF actively invests in a portfolio of high-yield municipal securities.

Composition Primarily invests in municipal bonds, with a focus on those rated below investment grade.

Market Share: Market share data is not readily available in real-time without specialized financial data subscriptions. This is a high-yield municipal bond ETF.

Total Net Assets (AUM): 44400000

Key Competitors

• HYMB
• VTEB
• MUB
• ITM
• MLN

Competitive Landscape

The ETF industry for municipal bonds is competitive, with several large players offering both high-yield and investment-grade options. FMHI distinguishes itself through its higher allocation to below-investment-grade bonds, offering potentially higher yields but also greater risk compared to competitors holding primarily investment-grade securities. Its main disadvantages include higher volatility and potential credit risk compared to more conservative municipal bond ETFs.

Historical Performance: Historical performance data would be presented in a separate data table, to provide returns over various time periods (e.g., 1-year, 3-year, 5-year, 10-year, since inception).

Benchmark Comparison: The ETF's performance would typically be compared to a high-yield municipal bond index to assess its relative performance.

Expense Ratio: 0.9

Average Trading Volume

FMHI's average trading volume is moderate, indicating sufficient liquidity for most investors.

Bid-Ask Spread

The bid-ask spread is typically moderate but can widen during periods of market volatility, impacting trading costs.

Market Environment Factors

Economic conditions, interest rate movements, and changes in municipal credit ratings influence the ETF's performance. Lower interest rates may benefit the ETF; however, increases in rates may decrease the ETF's price.

Growth Trajectory

Growth trends depend on market conditions, investor appetite for high-yield municipal bonds, and the ETF's ability to generate competitive returns. Changes to strategy and holdings are possible to adapt to market dynamics, such as the reduction of durations or allocations.

Competitive Edge

FMHI's competitive edge lies in its focus on high-yield municipal bonds, offering investors access to a potentially higher income stream than investment-grade municipal bond ETFs. The active management aims to identify undervalued or mispriced securities within the high-yield municipal bond market. It also provides a convenient way for investors to diversify their municipal bond holdings. The ETF appeals to investors seeking tax-exempt income and willing to accept higher risk for potentially higher returns.

Volatility

The ETF is expected to exhibit higher volatility than investment-grade municipal bond ETFs due to its focus on lower-rated securities.

Market Risk

The primary risks include credit risk (the issuer's ability to repay principal and interest), interest rate risk (bond values decline as interest rates rise), and liquidity risk (difficulty selling bonds during times of market stress).

Ideal Investor Profile

The ideal investor is one seeking tax-exempt income, comfortable with higher risk, and has a long-term investment horizon. It is geared towards investors who have a higher risk tolerance and who are able to do their own research and due diligence.

Market Risk

FMHI is more suitable for long-term investors seeking income rather than active traders due to its higher volatility and potential for fluctuating values.

The First Trust Municipal High Income ETF (FMHI) offers a high-yield, tax-exempt income stream through its investment in below-investment-grade municipal bonds. Its active management seeks to identify undervalued opportunities, but investors should be aware of the elevated risks associated with lower-rated securities. It is suitable for long-term investors with a higher risk tolerance seeking to maximize tax-advantaged income. It has a high expense ratio when compared with broad based ETF alternatives. Investors should consider the current market conditions and their personal risk tolerance before investing.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

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