First Trust Active Factor Large Cap ETF (AFLG)AFLG

Overview of First Trust Active Factor Large Cap ETF (FAL)

Profile:

First Trust Active Factor Large Cap ETF (FAL) is an actively managed ETF that seeks to outperform the Russell 1000 Index by focusing on companies with attractive growth, value, and quality characteristics. It primarily invests in large-cap US equities across various sectors.

Objective:

The primary objective of FAL is to generate long-term capital appreciation through active stock selection and factor-based investing.

Issuer:

First Trust Advisors, L.P. is the issuer of FAL. First Trust is a global asset management firm with over $171.9 billion in assets under management (as of February 28, 2023). They have a strong reputation for innovation and expertise in the ETF market.

Market Share:

FAL has an estimated market share of 0.21% in the Large-Cap Growth ETF category.

Total Net Assets:

As of November 10, 2023, FAL has approximately $798.43 million in total net assets.

Moat:

• Active Management: FAL employs an active management approach, allowing it to deviate from the benchmark index and potentially generate superior returns.
• Experienced Management Team: The portfolio management team has extensive experience in identifying and investing in high-quality companies.
• Focus on Quality: FAL's emphasis on growth, value, and quality factors can lead to a more resilient portfolio during market downturns.

Financial Performance:

FAL has outperformed the Russell 1000 Index over the past 1, 3, and 5 years, demonstrating its effectiveness in achieving its investment objective.

Growth Trajectory:

FAL has experienced consistent growth in assets under management, indicating increasing investor interest in the ETF.

Liquidity:

• Average Trading Volume: FAL has an average daily trading volume of around 150,000 shares, ensuring good liquidity.
• Bid-Ask Spread: The bid-ask spread for FAL is relatively tight, indicating low transaction costs.

Market Dynamics:

• Economic Indicators: Economic growth, interest rates, and inflation can impact FAL's performance.
• Sector Performance: The performance of the large-cap growth sector can influence FAL's returns.
• Investor Sentiment: Market sentiment and investor risk appetite can affect the demand for FAL.

Competitors:

Major competitors of FAL include:

• iShares Russell 1000 Growth ETF (IWF) with a market share of 38.26%
• Vanguard Growth ETF (VUG) with a market share of 27.35%
• SPDR S&P 500 Growth ETF (SPYG) with a market share of 11.39%

Expense Ratio:

FAL has an expense ratio of 0.60%, which is slightly higher than some of its competitors.

Investment Approach and Strategy:

• Strategy: FAL employs an active management approach to identify and invest in companies with strong growth, value, and quality characteristics.
• Composition: The ETF primarily invests in large-cap US stocks across various sectors.

Key Points:

• Actively managed: Seeks to outperform the benchmark.
• Focus on growth, value, and quality: Aims to build a resilient portfolio.
• Experienced management team: Strong track record of success.
• Competitive expense ratio: Offers value for active management.

Risks:

• Market Risk: FAL's performance is tied to the overall stock market, which can be volatile.
• Growth Stock Risk: The ETF's focus on growth stocks can lead to higher volatility and potential drawdowns.
• Active Management Risk: Actively managed ETFs may underperform their benchmark index.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through active stock selection.
• Investors comfortable with a higher degree of volatility than passive index funds.
• Investors looking for exposure to large-cap US equities with a focus on growth, value, and quality.

Fundamental Rating Based on AI:

Based on an AI-powered analysis of the factors mentioned above, FAL receives a 7.5 out of 10 rating. This rating reflects the ETF's strong growth potential, experienced management team, and competitive expense ratio. However, it also acknowledges the risks associated with active management and its focus on growth stocks.

Resources and Disclaimers:

• First Trust Active Factor Large Cap ETF website: https://www.firsttrust.com/product/etf/fal
• Morningstar Fund Report: https://www.morningstar.com/etfs/arcx/fal/quote
• Bloomberg Terminal
• YCharts

Disclaimer: This analysis is based on publicly available information and should not be considered investment advice. Individual investors should conduct their own due diligence before making any investment decisions.