First Trust Active Factor Large Cap ETF (AFLG)

Overview

The First Trust Active Factor Large Cap ETF (FFA) seeks long-term capital appreciation by investing in a diversified portfolio of large-cap U.S. stocks, utilizing a quantitative, active management strategy focused on factors like value, momentum, quality, and volatility.

Reputation and Reliability

First Trust is a well-established ETF provider known for its innovative and factor-based investment strategies. They have a solid track record in the ETF market.

Management Expertise

First Trust has a dedicated team of experienced portfolio managers and analysts specializing in quantitative and factor-based investing.

Goal

Seeks long-term capital appreciation.

Investment Approach and Strategy

Strategy: FFA employs an active management strategy, not tracking a specific index. It uses a quantitative model to select and weight stocks based on factors such as value, momentum, quality, and low volatility.

Composition Primarily invests in large-cap U.S. equities.

Market Share: Data not readily available without subscription services for precise FFA's specific market share.

Total Net Assets (AUM): 562739673

Key Competitors

• IVV (iShares CORE S&P 500)
• SPY (SPDR S&P 500 ETF Trust)
• VTV (Vanguard Value ETF)
• IWD (iShares Russell 1000 Value ETF)

Competitive Landscape

The large-cap ETF market is highly competitive, dominated by passively managed S&P 500 trackers and value-focused ETFs. FFA differentiates itself through its active, multi-factor approach, potentially offering outperformance but also carrying higher expense ratios. While passive ETFs have lower costs, FFA aims to deliver superior risk-adjusted returns through its factor selection process. Smaller AUM compared to competitors.

Historical Performance: Performance data not consistently available without subscription services. However, historical data generally tracks with large-cap U.S. equities.

Benchmark Comparison: The ETF aims to outperform its benchmark index (Russell 1000) through active factor selection.

Expense Ratio: 0.59

Average Trading Volume

The average trading volume is moderate, which suggests adequate liquidity for typical investors.

Bid-Ask Spread

The bid-ask spread is generally tight, indicating relatively low transaction costs.

Market Environment Factors

Economic growth, interest rates, inflation, and investor sentiment toward value and quality factors can all impact FFA's performance.

Growth Trajectory

Growth depends on the ETF's ability to consistently select stocks that outperform based on its factor model. Strategy and holding changes are influenced by quantitative models and economic conditions.

Competitive Edge

FFA's competitive advantage lies in its active, multi-factor investment strategy, which seeks to outperform passive large-cap benchmarks. Its quantitative model combines factors like value, momentum, quality, and low volatility to select stocks. This approach aims to provide downside protection and capture upside potential. The ETF's experienced management team and the First Trust brand contribute to its credibility.

Volatility

Volatility will track with the underlying large-cap equity market, potentially reduced due to its low-volatility factor. Active management could also add to volatility relative to passive indices.

Market Risk

FFA is subject to market risk, including economic downturns, sector-specific declines, and changes in investor sentiment towards the factors used in its selection process.

Ideal Investor Profile

FFA is suitable for investors seeking long-term capital appreciation with a preference for active management and factor-based investing. Investors who understand the risks and potential rewards of active management are suitable.

Market Risk

FFA is more suitable for long-term investors seeking potential outperformance compared to passive index followers, but are willing to tolerate a higher expense ratio.

The First Trust Active Factor Large Cap ETF (FFA) offers exposure to large-cap U.S. equities through an active, factor-based strategy, seeking long-term capital appreciation. FFA uses a quantitative model to select stocks based on value, momentum, quality, and low volatility. The ETF's higher expense ratio is justified by its active management and potential for outperformance. Ideal investors are those seeking long-term growth and comfortable with active management and factor-based investing, but this ETF may not be a good option for very risk adverse investor.

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 data and ETF performance are subject to change.