First Trust Multi-Asset Diversified Income Index Fund (MDIV)

Overview

The First Trust Multi-Asset Diversified Income Index Fund (MDIV) is an actively managed exchange-traded fund designed to provide investors with diversified income across multiple asset classes. Its primary focus is on generating high current income, with an emphasis on dividend-paying equities, income-focused ETFs, and other income-generating securities. The fund aims to offer a blend of growth and income by investing in a variety of asset classes, including U.S. equities, fixed income, and real estate investment trusts (REITs).

Reputation and Reliability

First Trust is a well-established and reputable ETF issuer known for its diverse range of actively managed and index-based ETFs. They have a long track record of providing investment solutions to a wide array of investors.

Management Expertise

The ETF is managed by First Trust Advisors L.P., which has a team of experienced portfolio managers with a deep understanding of multi-asset investing and income generation strategies.

Goal

The primary investment goal of the First Trust Multi-Asset Diversified Income Index Fund is to seek to provide investors with current income and the potential for capital appreciation.

Investment Approach and Strategy

Strategy: MDIV does not aim to track a specific index. Instead, it is an actively managed fund that employs a strategy of investing in a diversified portfolio of income-producing securities across various asset classes.

Composition The ETF holds a mix of assets including dividend-paying U.S. equities, income-focused ETFs (such as those holding REITs, preferred stocks, and high-yield bonds), and potentially other income-generating instruments.

Market Share: Specific market share data for MDIV within the broader multi-asset income ETF category is not readily available in a standardized format. Its market share is influenced by its active management approach and diversified income focus.

Total Net Assets (AUM): 616798000

Key Competitors

• PIMCO Income Strategy Active ETF (PFLT)
• Global X Super Dividend REIT ETF (SRET)
• WisdomTree Global High Dividend ETF (GHD)
• SPDR Portfolio S&P 500 High Dividend ETF (SPYD)

Competitive Landscape

The multi-asset income ETF landscape is competitive, with both actively managed and passively managed funds vying for investor capital. MDIV's advantage lies in its active management, allowing for flexibility in asset allocation to seek income opportunities. However, this can also lead to higher fees compared to passive ETFs. Competitors often focus on specific income niches (e.g., REITs, high-dividend stocks) or broader fixed-income strategies.

Historical Performance: Historical performance data for MDIV shows variability across different periods, reflecting its active management and exposure to multiple asset classes. Investors should review the latest performance figures directly from the issuer or financial data providers for up-to-date returns over various timeframes (e.g., 1-year, 3-year, 5-year).

Benchmark Comparison: As an actively managed fund, MDIV does not have a fixed benchmark index that it strictly tracks. Its performance is typically assessed against a blended benchmark or a universe of comparable income-generating strategies.

Expense Ratio: 0.93

Average Trading Volume

MDIV exhibits moderate average trading volume, indicating reasonable liquidity for most retail investors, though institutional traders might find it less liquid than larger, more established ETFs.

Bid-Ask Spread

The bid-ask spread for MDIV is generally within acceptable ranges for an actively managed ETF, suggesting efficient trading without significant price discrepancies for common trade sizes.

Market Environment Factors

MDIV's performance is influenced by interest rate movements, inflation, corporate earnings, and overall economic growth. Sectors like REITs and high-dividend stocks are particularly sensitive to interest rate changes and real estate market conditions. The fund's diversification aims to mitigate some of these sector-specific risks.

Growth Trajectory

The growth trajectory of MDIV is tied to its ability to consistently generate attractive income streams and deliver competitive total returns. Changes to strategy and holdings are driven by the portfolio managers' assessment of market opportunities and risks within the income-generating landscape.

Competitive Edge

MDIV's competitive edge stems from its actively managed, multi-asset income strategy. This allows the fund managers to dynamically adjust allocations across equities, fixed income, and real estate to capitalize on income opportunities. Its diversification across asset classes aims to provide a more resilient income stream and potentially lower volatility compared to single-asset income funds. The fund's focus on current income can be attractive to investors seeking regular payouts.

Volatility

MDIV's historical volatility is generally moderate, reflecting its diversified holdings across asset classes with varying risk profiles. However, its exposure to equity and high-yield debt components can lead to periods of higher volatility, especially during market downturns.

Market Risk

The fund is subject to market risks associated with its underlying asset classes. These include equity market risk (price fluctuations in stocks), interest rate risk (impact on bond prices), credit risk (default risk of debt issuers), and real estate market risk (for its REIT holdings).

Ideal Investor Profile

The ideal investor for MDIV is one seeking a diversified stream of current income with the potential for capital appreciation. This includes income-focused investors, retirees, and those looking to supplement their investment portfolios with regular payouts.

Market Risk

MDIV is best suited for long-term investors who prioritize income generation and are comfortable with the moderate risks associated with an actively managed, multi-asset portfolio. It is not ideal for short-term traders seeking rapid capital gains.

The First Trust Multi-Asset Diversified Income Index Fund (MDIV) is an actively managed ETF focused on generating current income through a diversified portfolio of income-producing assets. It invests across equities, fixed income, and REITs, offering a blend of income and potential growth. While its active management provides flexibility, it also comes with a higher expense ratio compared to passive ETFs. MDIV is best suited for long-term investors seeking regular income streams who can tolerate moderate volatility.

Data Sources:

• First Trust Investors Website
• Financial Data Aggregators (e.g., Morningstar, ETF.com)

Disclaimers:

This information is for illustrative purposes only and does not constitute investment advice. Past performance is not indicative of future results. Investors should conduct their own due diligence and consult with a financial advisor before making investment decisions.