First Trust Emerging Markets Equity Select ETF (RNEM)

Overview

The First Trust Emerging Markets Equity Select ETF (FEM) seeks long-term capital appreciation by investing in a focused portfolio of equity securities of companies in emerging market countries, selected based on fundamental factors.

Reputation and Reliability

First Trust is a well-established ETF provider with a solid track record of launching and managing various investment products.

Management Expertise

First Trust has a dedicated team of investment professionals with experience in managing emerging market equity portfolios.

Goal

To seek long-term capital appreciation.

Investment Approach and Strategy

Strategy: The ETF employs a selection process based on fundamental factors to identify companies with attractive valuations and strong financial characteristics.

Composition The ETF primarily holds equity securities of companies located in emerging market countries.

Market Share: Data not readily available to calculate the exact market share.

Total Net Assets (AUM): 58380000

Key Competitors

• VWO
• IEMG
• EEM

Competitive Landscape

The emerging market ETF landscape is dominated by large, broad-based ETFs like VWO and IEMG. FEM differentiates itself through its selection methodology, focusing on fundamental factors, which may lead to outperformance but also higher tracking error compared to broad market-cap weighted ETFs. Its smaller AUM compared to competitors can affect liquidity.

Historical Performance: Historical financial performance data requires specific time periods and is best obtained from financial data providers. Consult a financial professional before investing.

Benchmark Comparison: Requires access to performance data and selection of a suitable benchmark, usually an emerging market index. Consult a financial professional before investing.

Expense Ratio: 0.85

Average Trading Volume

The average trading volume of FEM is low, which may affect the ease of buying or selling shares.

Bid-Ask Spread

The bid-ask spread might be relatively wide due to the lower trading volume of the ETF, potentially increasing trading costs.

Market Environment Factors

Emerging market equities are influenced by global economic growth, commodity prices, currency fluctuations, and political stability within individual countries.

Growth Trajectory

Growth trajectory depends on the ETF's ability to effectively select companies poised to benefit from emerging market growth. Any changes to strategy are disclosed within First Trust prospectuses and regulatory filings.

Competitive Edge

FEMu2019s competitive edge lies in its fundamentally driven stock selection process, potentially identifying undervalued companies with strong growth prospects. Unlike market-cap weighted ETFs, FEM aims to generate alpha through active management, giving it the potential to outperform broad emerging market indices. However, this strategy involves higher fees and increased tracking error. The strategyu2019s success depends on the skill of the portfolio managers and the effectiveness of their selection process.

Volatility

Volatility is reflective of emerging markets, which are inherently more volatile than developed markets.

Market Risk

FEM is subject to risks associated with emerging markets, including political instability, currency fluctuations, and economic downturns in specific countries. These factors can significantly impact the ETF's performance.

Ideal Investor Profile

The ideal investor is one seeking long-term capital appreciation, comfortable with higher volatility, and has a strong risk tolerance related to emerging market exposure.

Market Risk

Suitable for long-term investors with a higher risk tolerance seeking exposure to emerging market equities via a strategy focused on fundamentally sound companies.

First Trust Emerging Markets Equity Select ETF (FEM) offers targeted exposure to emerging market equities through a fundamental, selection-driven investment approach. The ETF's active management strategy potentially provides higher returns but comes with increased risk and costs relative to passive market-cap weighted approaches. Therefore, the fund best suits investors with a high-risk tolerance and a long-term investment horizon, who are seeking exposure to emerging markets but are also comfortable with the potentially higher fees and lower liquidity associated with FEM.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

This analysis is for informational purposes only and does not constitute investment advice. Please consult with a qualified financial advisor before making any investment decisions. Market share data are approximate and based on available public information. All investment decisions should be made with consideration of your risk tolerance and financial situation. Performance can vary.