First Trust Active Factor Small Cap ETF (AFSM)

Overview

The First Trust Active Factor Small Cap ETF (DFAS) is an actively managed ETF that seeks long-term capital appreciation by investing primarily in small-capitalization U.S. stocks. It employs a quantitative, rules-based approach to select stocks based on factors such as value, momentum, quality, and low volatility.

Reputation and Reliability

First Trust is a well-established ETF issuer with a reputation for innovation and providing a range of investment solutions.

Management Expertise

First Trust has a team of experienced investment professionals who manage a variety of actively managed and index-based ETFs.

Goal

To seek long-term capital appreciation.

Investment Approach and Strategy

Strategy: The ETF is actively managed and does not track a specific index. It uses a quantitative model to select stocks.

Composition The ETF primarily holds U.S. small-cap stocks.

Market Share: Insufficient data to accurately state specific market share.

Total Net Assets (AUM): 76900000

Key Competitors

• Vanguard Small-Cap Value ETF (VBR)
• iShares Russell 2000 ETF (IWM)
• Avantis U.S. Small Cap Value ETF (AVUV)

Competitive Landscape

The small-cap ETF market is highly competitive, with numerous passively managed and actively managed funds vying for investor assets. DFAS competes on its active factor-based strategy, aiming to outperform traditional small-cap benchmarks. Its advantages include a focused factor-based approach and active management, while disadvantages include potentially higher fees and the risk of underperformance compared to passive alternatives.

Historical Performance: Historical performance data unavailable in requested format.

Benchmark Comparison: Benchmark comparison data unavailable in requested format.

Expense Ratio: 0.69

Average Trading Volume

The ETF's average trading volume indicates moderate liquidity.

Bid-Ask Spread

The bid-ask spread is typically low, indicating reasonable trading costs.

Market Environment Factors

DFAS is affected by economic growth, interest rates, and investor sentiment towards small-cap stocks. Favorable economic conditions and positive market sentiment generally benefit small-cap stocks.

Growth Trajectory

The growth trajectory of DFAS depends on its ability to consistently outperform its small-cap peers through its factor-based investment strategy. Changes to its factor model or holdings can impact its future performance.

Competitive Edge

DFAS's competitive edge lies in its active, factor-based approach to small-cap investing, using a quantitative model to identify stocks with favorable characteristics. This aims to deliver superior risk-adjusted returns compared to passively managed small-cap funds. The specific factors considered (value, momentum, quality, and low volatility) are well-established investment strategies, which could resonate with factor-conscious investors. This approach is actively managed, allowing for flexibility in response to market changes, potentially offering an advantage over purely passive funds.

Volatility

DFAS, like other small-cap funds, can exhibit higher volatility than large-cap funds due to the inherent risks associated with smaller companies.

Market Risk

DFAS is subject to market risk, including economic downturns, changes in interest rates, and shifts in investor sentiment, all of which can impact the value of its holdings.

Ideal Investor Profile

The ideal investor for DFAS is one seeking long-term capital appreciation and is comfortable with the risks associated with small-cap stocks and active management. Investors who believe in factor-based investing and are seeking to outperform traditional small-cap benchmarks may also find this ETF appealing.

Market Risk

DFAS is best suited for long-term investors who are willing to accept higher volatility in exchange for potentially higher returns. It may not be suitable for risk-averse investors or those seeking passive index tracking.

The First Trust Active Factor Small Cap ETF (DFAS) is an actively managed fund that seeks long-term capital appreciation through a factor-based approach to small-cap investing. Its strategy focuses on value, momentum, quality, and low volatility factors to identify potentially outperforming stocks. While it offers the potential for superior returns, it also carries higher fees and the risk of underperformance compared to passive alternatives. The ETF is suitable for long-term investors comfortable with small-cap volatility and active management risk.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

This analysis is based on available information and is not financial advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions. Market share data may be limited or unavailable.