First Trust SMID Capital Strength ETF (FSCS)

Overview

The First Trust SMID Capital Strength ETF (FTSM) seeks to provide investment results that correspond to the performance of the NASDAQ US Small Mid Cap Rising Dividend Achievers Index. The fund focuses on small and mid-cap companies with strong balance sheets and a history of increasing dividends. It aims for long-term capital appreciation by investing in high-quality, dividend-paying stocks.

Reputation and Reliability

First Trust is a well-established ETF provider known for its innovative and thematic ETFs. They have a strong track record and are considered a reliable issuer.

Management Expertise

First Trust has a dedicated team of experienced investment professionals who manage a diverse range of ETFs. Their expertise lies in quantitative and rules-based investment strategies.

Goal

To provide investment results that closely correspond to the performance of the NASDAQ US Small Mid Cap Rising Dividend Achievers Index.

Investment Approach and Strategy

Strategy: The ETF tracks a specific index focused on small and mid-cap companies with capital strength and rising dividends.

Composition The ETF primarily holds common stocks of small and mid-cap companies that meet the index criteria. It focuses on companies with strong balance sheets and a history of increasing dividend payments.

Market Share: The market share varies depending on the specific SMID-cap dividend ETF category, and is subject to market fluctuations.

Total Net Assets (AUM): 142570000

Key Competitors

• Vanguard Small-Cap Value ETF (VBR)
• iShares Core S&P Small-Cap ETF (IJR)
• Schwab U.S. Small-Cap ETF (SCHA)

Competitive Landscape

The SMID-cap ETF market is highly competitive with numerous established players. FTSM's advantage lies in its focus on capital strength and rising dividends, potentially attracting investors seeking higher-quality, income-generating small and mid-cap stocks. However, its AUM is smaller, and its expense ratio may be higher than some larger, more diversified competitors like VBR and IJR.

Historical Performance: Historical performance data should be obtained from reliable financial sources. These sources should have accurate data over multiple timeframes.

Benchmark Comparison: Comparison against the NASDAQ US Small Mid Cap Rising Dividend Achievers Index is necessary to assess tracking accuracy.

Expense Ratio: 0.6

Average Trading Volume

The ETF's liquidity is moderate, as reflected by average daily trading volume, which should be obtained from reliable sources.

Bid-Ask Spread

The bid-ask spread is generally tight, indicating relatively low trading costs, but this depends on prevailing market conditions.

Market Environment Factors

Economic growth, interest rates, and investor sentiment towards small and mid-cap stocks influence the ETF's performance. Changes in dividend policies also impact the investment outcome.

Growth Trajectory

Growth is tied to the performance of the underlying index and the ETF's ability to attract investor capital. Any changes to the index methodology or the ETF's investment strategy would impact the holdings and performance.

Competitive Edge

FTSM's competitive edge lies in its focus on small and mid-cap companies exhibiting capital strength and a history of rising dividends. This strategy appeals to investors seeking a balance of growth potential and income. The ETF provides a disciplined approach to small- and mid-cap investing by screening companies based on financial metrics. This potentially reduces exposure to riskier companies and enhances long-term returns. This targeted approach differentiates it from broader small-cap ETFs.

Volatility

Volatility is typical of small and mid-cap stocks, meaning the ETF may experience greater price swings than larger-cap ETFs.

Market Risk

Specific risks include economic downturns disproportionately affecting smaller companies, and dividend cuts by companies within the portfolio.

Ideal Investor Profile

The ETF is suitable for investors seeking exposure to small and mid-cap stocks with a focus on dividend growth and capital strength. It's appropriate for those with a moderate to high risk tolerance.

Market Risk

This ETF is best for long-term investors looking for a blend of growth and income, rather than active traders seeking short-term gains.

First Trust SMID Capital Strength ETF (FTSM) offers targeted exposure to small and mid-cap dividend-paying companies with robust financial health. Its focus on rising dividends makes it attractive for income-seeking investors. While SMID-cap exposure may introduce higher volatility, the ETF's strategy aims to mitigate risk by emphasizing companies with strong balance sheets. Compared to competitors, FTSM carves a niche by emphasizing a specific quality factor, but this also reduces diversification benefits. Investors should carefully consider their risk tolerance and investment goals before investing.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar
• Company Filings

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Market data is subject to change.