First Trust RiverFront Dynamic Emerging Markets ETF (RFEM)

Overview

The First Trust RiverFront Dynamic Emerging Markets ETF (RFEM) seeks long-term capital appreciation by investing in emerging market equities. It employs a dynamic, actively managed approach, adjusting its exposure based on quantitative and qualitative factors to optimize risk-adjusted returns.

Reputation and Reliability

First Trust is a well-established ETF issuer with a solid reputation for providing innovative investment solutions.

Management Expertise

First Trust advisors L.P. has extensive experience in managing various ETF products, including international and emerging market strategies. RiverFront Investment Group provides sub-advisory services.

Goal

Seeks long-term capital appreciation.

Investment Approach and Strategy

Strategy: Actively managed ETF focusing on emerging market equities, employing a dynamic asset allocation strategy.

Composition Primarily holds equities of companies located in emerging market countries, with flexibility to adjust sector and country exposures based on market conditions.

Market Share: RFEM has a relatively small market share compared to larger, more established emerging market ETFs.

Total Net Assets (AUM): 105500000

Key Competitors

• Vanguard FTSE Emerging Markets ETF (VWO)
• iShares Core MSCI Emerging Markets ETF (IEMG)
• Schwab Emerging Markets Equity ETF (SCHE)

Competitive Landscape

The emerging markets ETF space is highly competitive, dominated by low-cost, passively managed funds. RFEM's active management approach differentiates it, but also comes with higher fees. Its success hinges on its ability to outperform passive benchmarks consistently, justifying the higher cost. VWO and IEMG offer broad market exposure at lower expense ratios.

Historical Performance: Historical performance data is needed and should be reviewed across different time periods to assess RFEM's return and risk profile.

Benchmark Comparison: RFEM's performance needs to be compared against a broad emerging markets index (e.g., MSCI Emerging Markets Index) to determine its value-add from active management.

Expense Ratio: 0.85

Average Trading Volume

The average trading volume for RFEM is moderate, and it is typically liquid enough for most investors, though larger trades could impact price.

Bid-Ask Spread

The bid-ask spread varies depending on market conditions and trading volume, typically wider than larger, more liquid ETFs.

Market Environment Factors

Emerging market equities are influenced by global economic growth, commodity prices, currency fluctuations, and geopolitical events, all of which impact RFEM's performance.

Growth Trajectory

RFEM's growth trajectory depends on its ability to attract assets through consistent outperformance and effective marketing of its active management strategy.

Competitive Edge

RFEM's competitive advantage lies in its dynamic, actively managed approach, which allows it to adjust its portfolio based on market conditions and quantitative factors, potentially offering superior risk-adjusted returns. Its active management contrasts with many passively managed peers and may appeal to investors seeking alpha. Riverfront Investment Group's experience provides expertise in navigating emerging market volatility. This focus on active asset allocation and risk management differentiates it from passive, index-tracking ETFs.

Volatility

Emerging market equities tend to be more volatile than developed market equities; RFEM's volatility should be assessed relative to its benchmark and peers.

Market Risk

RFEM is subject to market risk, currency risk, and political risk associated with investing in emerging market countries.

Ideal Investor Profile

RFEM is suitable for investors seeking long-term capital appreciation through exposure to emerging market equities and who are comfortable with higher levels of volatility and actively managed strategies.

Market Risk

RFEM may be more suitable for long-term investors who believe in active management's ability to add value in emerging markets.

The First Trust RiverFront Dynamic Emerging Markets ETF (RFEM) offers exposure to emerging market equities through an actively managed approach, aiming for long-term capital appreciation. Its dynamic asset allocation strategy differentiates it from passively managed competitors, potentially offering superior risk-adjusted returns. However, this active management comes at a higher expense ratio. Investors should carefully consider their risk tolerance and investment goals before investing in RFEM, considering its relatively small AUM and moderate trading volume.

Data Sources:

• First Trust website
• ETF.com
• Morningstar

Disclaimers:

This analysis is for informational purposes only and does not constitute investment advice. Investment decisions should be based on your own research and consultation with a financial advisor.