First Trust SMID Growth Strength ETF (FSGS)

Overview

The First Trust SMID Growth Strength ETF is an actively managed exchange-traded fund that focuses on investing in U.S. dollar-denominated equity securities of companies with small to mid-sized market capitalizations that exhibit characteristics of growth. The ETF aims to identify companies demonstrating strong earnings growth, revenue growth, and other indicators of upward financial momentum.

Reputation and Reliability

First Trust is a well-established and reputable investment firm known for its diverse range of ETFs, including actively managed and index-based products. They have a long history of providing investment solutions to individual and institutional investors.

Management Expertise

The ETF is managed by First Trust Advisors L.P., which employs a team of experienced investment professionals with expertise in equity research, portfolio management, and identifying growth opportunities within the small and mid-cap segments of the U.S. equity market.

Goal

The primary investment goal of the First Trust SMID Growth Strength ETF is to achieve capital appreciation.

Investment Approach and Strategy

Strategy: This ETF is actively managed, meaning its portfolio managers make decisions about which securities to buy and sell rather than passively tracking a specific index. The strategy focuses on identifying companies exhibiting strong growth characteristics.

Composition The ETF primarily holds U.S. equities of companies categorized as small to mid-capitalization. These companies are selected based on their growth potential, including factors like earnings growth, revenue growth, and other financial metrics indicating upward momentum.

Market Share: Information on specific market share for individual ETFs within niche segments like SMID Growth can be difficult to isolate and is subject to constant change. It is generally a competitive space with many players.

Total Net Assets (AUM): 1170000000

Key Competitors

• iShares Russell 2000 Growth ETF (IWO)
• Vanguard Small-Cap Growth ETF (VBK)
• Schwab U.S. Small-Cap Growth ETF (SCHG)

Competitive Landscape

The SMID (Small and Mid-Cap) growth ETF landscape is highly competitive, featuring both passive index-tracking ETFs and actively managed funds. Advantages for First Trust SMID Growth Strength ETF might lie in its active management potentially identifying unique opportunities, while disadvantages could be higher fees compared to passive ETFs and the inherent risks of active management underperforming its benchmark. Competitors like IWO and VBK often benefit from brand recognition, lower expense ratios, and broad market access through their index-tracking strategies.

Historical Performance: As of recent data, the ETF has shown variable performance over different periods. For example, it may have demonstrated strong returns in periods favoring growth stocks and smaller companies, but could lag in periods of value stock outperformance or broader market downturns. Specific year-over-year returns and longer-term annualized returns would need to be consulted from current financial data providers.

Benchmark Comparison: The ETF's performance is typically compared against growth indices for small and mid-cap companies, such as the Russell 2000 Growth Index or the S&P SmallCap 600 Growth Index. Its effectiveness is gauged by its ability to outperform or match its chosen benchmark, after accounting for fees.

Expense Ratio: 0.0057

Average Trading Volume

The average trading volume for the First Trust SMID Growth Strength ETF indicates a moderate level of liquidity, facilitating relatively easy entry and exit for most investors.

Bid-Ask Spread

The bid-ask spread for the ETF is generally tight, reflecting sufficient trading activity and competitive market-making, which minimizes the direct trading cost for investors.

Market Environment Factors

The ETF is sensitive to macroeconomic factors such as interest rate changes, inflation, and overall economic growth, which heavily influence the performance of growth-oriented small and mid-cap companies. Sector-specific trends, particularly in technology, healthcare, and consumer discretionary, also play a significant role. The current market sentiment towards growth stocks versus value stocks is a crucial determinant of its performance.

Growth Trajectory

The ETF's growth trajectory is tied to the success of its active management strategy in identifying and capitalizing on emerging growth companies within the small and mid-cap space. Changes in strategy or holdings are driven by market outlook and the fund manager's ongoing research into companies exhibiting sustained growth potential.

Competitive Edge

The ETF's competitive edge stems from its active management approach, which allows for discretionary selection of growth-oriented small and mid-cap companies not strictly dictated by an index. This can lead to potential alpha generation if managers successfully identify undervalued growth opportunities. The fund's focus on 'strength' in growth metrics suggests a disciplined selection process aimed at resilient growers, offering a differentiated approach within the crowded SMID growth universe.

Volatility

The First Trust SMID Growth Strength ETF, due to its focus on small and mid-cap growth stocks, is subject to higher volatility compared to large-cap or value-oriented ETFs. The growth segment itself can be more sensitive to market sentiment and economic shifts.

Market Risk

Specific market risks include the general volatility of equity markets, the potential for economic downturns, and the increased susceptibility of smaller companies to economic shocks. There is also sector-specific risk if the ETF has a concentration in certain industries that experience downturns. The active management strategy also introduces management risk, where the fund's performance is dependent on the skill of the portfolio managers.

Ideal Investor Profile

The ideal investor for the First Trust SMID Growth Strength ETF is one who seeks capital appreciation, has a higher risk tolerance, and believes in the potential of small and mid-cap companies to outperform larger ones over the long term. Investors should have a good understanding of growth investing principles.

Market Risk

This ETF is best suited for long-term investors who are willing to accept higher volatility in pursuit of potentially higher returns. It is less suitable for conservative investors or those seeking immediate income.

The First Trust SMID Growth Strength ETF is an actively managed fund targeting U.S. small and mid-cap companies with strong growth characteristics. It aims for capital appreciation by identifying companies with robust earnings and revenue growth. While it offers the potential for higher returns through active management, it also comes with higher volatility and management risk compared to passive ETFs. Its competitive edge lies in its focused selection strategy within the dynamic SMID growth segment.

Data Sources:

• First Trust website
• Financial data providers (e.g., Morningstar, Bloomberg)
• ETF issuer filings and prospectuses

Disclaimers:

This information is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investors should consult with a qualified financial advisor before making any investment decisions.