First Trust Preferred Securities and Income ETF (FPE)

Overview

The First Trust Preferred Securities and Income ETF (FFP) seeks to provide investors with income and capital appreciation by investing primarily in preferred securities and other income-producing securities. Its target sector is income-generating assets, with a focus on preferred stocks and corporate bonds.

Reputation and Reliability

First Trust is a well-established ETF issuer known for its diverse range of investment products and a strong track record in asset management.

Management Expertise

The ETF is managed by a team with extensive experience in fixed income and preferred securities, employing a research-driven approach to security selection.

Goal

To generate current income and potential capital appreciation for investors.

Investment Approach and Strategy

Strategy: FFP actively manages its portfolio, selecting securities based on a combination of fundamental analysis and macroeconomic outlook, rather than tracking a specific index.

Composition The ETF primarily holds preferred stocks, convertible securities, and other income-producing debt instruments, offering a diversified mix of corporate credit and equity-like features.

Market Share: Market share data for niche ETFs like FFP can be difficult to isolate precisely. However, it operates within the broader preferred securities ETF market.

Total Net Assets (AUM): 1577700000

Key Competitors

• iShares Preferred and Income Securities ETF (PFF)
• Invesco Preferred ETF (PGX)
• VanEck Preferred Securities ex Financials ETF (PFXF)

Competitive Landscape

The preferred securities ETF market is dominated by a few large players with significant AUM. FFP competes by offering a potentially more actively managed approach and specific sector focus compared to passively managed competitors. Its advantages include potential for higher yield through active management, while disadvantages could be higher expense ratios and the risk associated with active management underperformance.

Historical Performance: Historical performance data for FFP shows varied returns across different time horizons. Over the past 5 years, it has delivered moderate returns, with periods of both positive and negative performance influenced by interest rate movements and credit market conditions.

Benchmark Comparison: FFP's performance is often compared against indices like the ICE BofAML Preferred Stock Index. Its active management strategy aims to outperform this benchmark, though success can vary.

Expense Ratio: 0.0095

Average Trading Volume

The ETF exhibits moderate average daily trading volume, suggesting reasonable liquidity for most retail investors.

Bid-Ask Spread

The bid-ask spread for FFP is typically within an acceptable range, indicating efficient trading mechanics.

Market Environment Factors

FFP is sensitive to interest rate fluctuations, credit spreads, and the overall health of the financial sector. Changes in monetary policy and economic growth prospects significantly impact its underlying holdings. The growing preference for income-generating assets can be a tailwind.

Growth Trajectory

The ETF has maintained a relatively stable AUM, with slight fluctuations reflecting market sentiment and investor flows into income-oriented products. Its strategy remains focused on preferred securities and income generation.

Competitive Edge

FFP's competitive edge lies in its active management approach, allowing for tactical adjustments in its portfolio based on market conditions. Its focus on preferred securities provides a unique income stream distinct from traditional bonds or equities. The issuer's reputation and established distribution network also contribute to its market presence.

Volatility

FFP has historically exhibited moderate volatility, often lower than broad equity ETFs but higher than investment-grade bond funds, reflecting the hybrid nature of preferred securities.

Market Risk

Key market risks include interest rate risk (rising rates can decrease bond and preferred security values), credit risk (risk of issuer default), and sector-specific risks within the financial and utility industries, which are common issuers of preferred stock.

Ideal Investor Profile

The ideal investor for FFP is someone seeking regular income, with a moderate risk tolerance, and who understands the intricacies of preferred securities. Investors looking for diversification beyond traditional bonds and equities may also find it suitable.

Market Risk

FFP is generally best suited for long-term investors seeking income generation and capital preservation with a moderate level of risk. It may not be ideal for short-term traders due to its income focus and potential volatility.

The First Trust Preferred Securities and Income ETF (FFP) offers investors a diversified portfolio of income-producing preferred securities. It aims for current income and capital appreciation through an active management strategy. While facing competition from larger ETFs, FFP distinguishes itself with its specialized focus and management expertise. It is suitable for long-term investors seeking yield with moderate risk tolerance, but is subject to interest rate and credit market fluctuations.

Data Sources:

• First Trust Website
• Financial Data Provider APIs (e.g., Morningstar, ETF.com)

Disclaimers:

This information is for educational purposes only and should not be considered 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.