First Trust Horizon Managed Volatility Small/Mid ETF (HSMV)

Overview

First Trust Horizon Managed Volatility Small/Mid ETF (HMTV) seeks investment results that correspond generally to the price and yield of an index that measures the performance of small and mid-capitalization U.S. equity securities while seeking to mitigate downside risk. The ETF employs a managed volatility strategy, aiming for lower volatility than traditional small/mid-cap indexes.

Reputation and Reliability

First Trust is a well-established ETF provider with a strong track record.

Management Expertise

First Trust Advisors L.P. has a team of experienced investment professionals specializing in ETF management and risk management strategies.

Goal

To provide investment results that correspond generally to the price and yield of an index that measures the performance of small and mid-capitalization U.S. equity securities while seeking to mitigate downside risk.

Investment Approach and Strategy

Strategy: The ETF does not track a specific traditional index. Instead, it uses a proprietary managed volatility strategy to select and weight securities.

Composition The ETF primarily holds small and mid-capitalization U.S. equity securities.

Market Share: HMTV's market share within the managed volatility small/mid-cap ETF segment is moderate, and its influence in the broader small/mid-cap market is relatively limited.

Total Net Assets (AUM): 109320000

Key Competitors

• Invesco S&P SmallCap Low Volatility ETF (XSLV)
• ALPS O'Shares U.S. Small-Cap Quality Dividend ETF (OUSM)

Competitive Landscape

The competitive landscape is moderately fragmented, with several ETFs offering exposure to small/mid-cap equities with varying volatility management strategies. HMTV differentiates itself through its proprietary managed volatility approach, but faces competition from more passively managed low-volatility ETFs and dividend-focused strategies. XSLV has the highest market share in the space, indicating higher investor preference.

Historical Performance: Historical performance varies depending on the market conditions and the effectiveness of the managed volatility strategy. Returns typically lag the broader small-cap market during strong bull markets but outperform during downturns.

Benchmark Comparison: Performance is best compared against a broad small/mid-cap index (like the Russell 2500) and other low-volatility small/mid-cap ETFs.

Expense Ratio: 0.006

Average Trading Volume

The average trading volume is moderate, which can affect the ease of buying or selling shares, particularly in large quantities.

Bid-Ask Spread

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

Market Environment Factors

Economic growth, interest rates, and investor sentiment towards small/mid-cap companies significantly influence HMTV's performance. The ETF's risk-managed approach may provide downside protection during periods of economic uncertainty.

Growth Trajectory

Growth depends on the continued interest in managed volatility strategies and the ETF's ability to attract assets. Any shift towards or away from small cap investments will change the ETF's composition

Competitive Edge

HMTV's competitive edge lies in its actively managed volatility strategy that seeks to reduce downside risk. This differentiates it from passively managed small/mid-cap ETFs. Its process aims to provide smoother returns than the overall small/mid-cap market, appealing to risk-averse investors. The active management, while potentially adding value during downturns, also introduces the risk of underperformance relative to the market during rallies.

Volatility

HMTV generally exhibits lower volatility than the broad small/mid-cap market due to its managed volatility strategy.

Market Risk

Specific risks include exposure to small/mid-cap equities, which can be more volatile than large-cap stocks. The managed volatility strategy may not fully protect against market downturns.

Ideal Investor Profile

Ideal investors are those seeking exposure to small/mid-cap equities with a focus on downside risk mitigation. It is suited for investors who prioritize capital preservation over maximum potential returns.

Market Risk

HMTV is suitable for long-term investors seeking a less volatile small/mid-cap allocation or those nearing retirement. Not suitable for active traders looking for aggressive growth.

First Trust Horizon Managed Volatility Small/Mid ETF (HMTV) offers exposure to U.S. small/mid-cap equities with a focus on managing volatility. The ETF's active approach seeks to provide downside protection during market downturns, potentially at the expense of underperforming during strong bull markets. This makes it suitable for risk-averse investors seeking long-term capital appreciation with reduced volatility compared to a standard small/mid-cap index. Competitors with bigger market share such as XSLV may be considered when comparing the ETF.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Market share data may be approximate. Past performance is not indicative of future results. Consult with a qualified financial advisor before making any investment decisions.