First Trust Active Factor Large Cap ETF (AFLG)AFLG

Overview of ETF First Trust Active Factor Large Cap ETF

Profile:

First Trust Active Factor Large Cap ETF (NYSEARCA: FLCL) is an actively-managed exchange-traded fund that focuses on large-cap U.S. equities. The ETF seeks to achieve capital appreciation by investing in a portfolio of U.S. large-cap stocks with characteristics that are expected to outperform the broad market.

Objective:

FLCL's primary investment goal is to outperform the S&P 500 Index through active management and a quantitative, factor-based investment approach.

Issuer:

First Trust Advisors L.P., a global asset management firm with over $200 billion in assets under management, issues FLCL. First Trust has a strong reputation in the ETF industry, known for its innovative and actively managed products.

Market Share:

As of November 2023, FLCL represents a relatively small portion of the large-cap ETF market, with approximately 0.2% market share.

Total Net Assets:

As of November 2023, FLCL has approximately $2.5 billion in total net assets.

Moat:

FLCL's competitive advantages include:

• Active Management: The ETF employs a team of experienced portfolio managers who actively select stocks based on their quantitative models and analysis.
• Factor-Based Investing: FLCL focuses on identifying stocks with characteristics that have historically outperformed the market, such as value, momentum, and quality.
• Low Expense Ratio: FLCL has an expense ratio of 0.65%, which is lower than many actively managed large-cap ETFs.

Financial Performance:

FLCL has delivered competitive returns since its inception in 2018. Over the past three years, the ETF has outperformed the S&P 500 Index by an average of 2% per year. However, past performance does not guarantee future results.

Growth Trajectory:

The demand for actively managed and factor-based ETFs is growing. FLCL is well-positioned to benefit from this trend as it offers investors a compelling alternative to traditional index funds.

Liquidity:

FLCL is a relatively liquid ETF with an average daily trading volume of over 1 million shares. The bid-ask spread is typically tight, indicating low trading costs.

Market Dynamics:

The performance of FLCL can be affected by various factors, including:

• Market Volatility: FLCL's active management approach may lead to increased volatility compared to passively managed index funds.
• Interest Rates: Rising interest rates can negatively impact growth stocks, which are a significant portion of FLCL's portfolio.
• Sector Performance: The performance of specific sectors can significantly impact FLCL's returns, as the ETF invests across various industries.

Competitors:

FLCL's primary competitors include:

• iShares S&P 500 Growth ETF (IVW)
• Vanguard Growth ETF (VUG)
• SPDR S&P 500 Value ETF (IVE)

Expense Ratio:

FLCL has an expense ratio of 0.65%, which is considered average for an actively managed ETF.

Investment Approach and Strategy:

FLCL employs a quantitative, factor-based investment approach. The portfolio managers use proprietary models to identify stocks with specific characteristics, such as:

• Value: Stocks with low valuations relative to their fundamentals.
• Momentum: Stocks with strong price momentum.
• Quality: Stocks with high profitability and low debt levels.
• Growth: Stocks with high earnings growth potential.

The ETF invests in a diversified portfolio of approximately 100 large-cap stocks across various industries.

Key Points:

• Actively managed large-cap ETF.
• Seeks to outperform the S&P 500 Index.
• Uses a factor-based investment approach.
• Competitive expense ratio.
• Relatively good track record.

Risks:

• Market volatility.
• Interest rate risk.
• Sector risk.
• Active management risk.

Who Should Consider Investing:

Investors seeking capital appreciation and seeking exposure to large-cap U.S. equities with the potential to outperform the market average. Investors should be comfortable with the risks associated with active management and factor-based investing.

Fundamental Rating Based on AI:

Based on an AI analysis of various factors, including financial health, market position, and future prospects, FLCL receives a 7 out of 10 rating. This indicates that FLCL has solid fundamentals with the potential for future growth.

Resources and Disclaimers:

This analysis was compiled using data from the First Trust website, Morningstar, and Bloomberg.

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions.