First Trust Preferred Securities and Income ETF (FPE)

Overview

The First Trust Preferred Securities and Income ETF (FPE) seeks to provide current income by investing primarily in preferred securities. It offers exposure to a diversified portfolio of preferred securities, which typically provide higher yields than traditional fixed income investments but also carry certain risks.

Reputation and Reliability

First Trust is a well-established and reputable ETF provider with a history of managing various investment products.

Management Expertise

First Trust has a dedicated team of investment professionals experienced in managing fixed income and preferred security portfolios.

Goal

To seek current income.

Investment Approach and Strategy

Strategy: The ETF invests primarily in preferred securities and other income-producing securities.

Composition The ETF primarily holds preferred stocks, with some allocation to other income-generating securities.

Market Share: FPE holds a significant but not dominant market share in the preferred securities ETF space.

Total Net Assets (AUM): 2360000000

Key Competitors

• PGX
• PFF
• SPFF
• PSK

Competitive Landscape

The preferred securities ETF market is relatively concentrated with a few large players. FPE competes on yield, expense ratio, and diversification. Advantages include active management, while disadvantages might be a higher expense ratio than purely passive funds.

Historical Performance: Past performance is not indicative of future results, but FPE has generally provided a stable income stream, which is the ETF's objective.

Benchmark Comparison: The ETF's performance is typically compared against indices like the ICE BofA Hybrid Preferred Securities Index.

Expense Ratio: 0.85

Average Trading Volume

The ETF's average trading volume is moderate, generally sufficient for most investors.

Bid-Ask Spread

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

Market Environment Factors

Interest rate changes, credit spreads, and overall economic conditions can affect the performance of preferred securities and, consequently, FPE.

Growth Trajectory

The ETF's growth is linked to investor demand for income-generating investments and the performance of the preferred securities market.

Competitive Edge

FPE's active management aims to identify preferred securities with attractive risk-adjusted returns, potentially outperforming passive indices. Its experienced management team can adjust the portfolio based on market conditions. The ETF diversifies its holdings to mitigate issuer-specific risk. This blend of active management and diversification provides a competitive advantage by aiming to provide higher income relative to the inherent risks of fixed income investing.

Volatility

Preferred securities generally exhibit less volatility than common stocks but are more volatile than government bonds.

Market Risk

Risks include interest rate risk, credit risk (issuer default), and call risk (securities being redeemed by the issuer).

Ideal Investor Profile

The ideal investor is a risk-averse individual seeking current income and diversification within their fixed income portfolio.

Market Risk

The ETF is suitable for long-term investors looking for income or those seeking to diversify a portfolio but may not be suitable for active traders due to its moderate volatility and focus on income.

First Trust Preferred Securities and Income ETF (FPE) is an actively managed ETF designed to provide current income by investing in preferred securities. The ETF aims to outperform passive preferred security benchmarks through active selection and diversification. While offering relatively stable income, the fund is subject to interest rate, credit, and call risks associated with preferred securities. It is most appropriate for income-seeking investors with a moderate risk tolerance and a long-term investment horizon.

Data Sources:

• First Trust website
• ETF.com
• Morningstar

Disclaimers:

The data provided is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Market share data is approximate and may vary.