First Trust Active Factor Mid Cap ETF (AFMC)AFMC

ETF First Trust Active Factor Mid Cap ETF (FNK)

Profile:

First Trust Active Factor Mid Cap ETF (FNK) is an actively managed ETF that invests in U.S. mid-cap equities. The ETF uses a quantitative factor-based approach to select stocks with characteristics associated with higher returns, such as value, momentum, and quality. FNK has approximately 200 holdings across various sectors, with the largest allocation to technology, financials, and healthcare.

Objective:

The primary investment goal of FNK is to outperform the Russell Midcap Index by actively identifying and investing in mid-cap companies with strong growth potential.

Issuer:

First Trust Advisors L.P. is the issuer of FNK.

Reputation and Reliability: First Trust is a reputable asset management firm with over $183.4 billion in assets under management (as of November 8, 2023). They have a long history of successfully managing ETFs and mutual funds.

Management: FNK is managed by a team of experienced portfolio managers with expertise in quantitative analysis and factor investing.

Market Share:

FNK has a market share of approximately 0.25% in the mid-cap value ETF category.

Total Net Assets:

FNK has total net assets of approximately $225 million as of November 8, 2023.

Moat:

FNK's main competitive advantage lies in its proprietary quantitative model and experienced management team. The active factor-based approach helps identify stocks with superior growth potential, potentially leading to outperformance compared to its benchmark.

Financial Performance:

Historical Performance: FNK has delivered strong returns since its inception in 2015, outperforming the Russell Midcap Index in most periods.

Benchmark Comparison: FNK has consistently outperformed the Russell Midcap Index over the past 3 and 5 years, demonstrating its effectiveness in achieving its investment objective.

Growth Trajectory:

FNK has experienced steady growth in its assets under management, indicating increasing investor interest in its active factor-based approach.

Liquidity:

Average Trading Volume: FNK has an average daily trading volume of around 40,000 shares, indicating good liquidity.

Bid-Ask Spread: The bid-ask spread for FNK is typically around 0.05%, indicating a low cost of trading.

Market Dynamics:

The performance of FNK is influenced by factors such as:

• Economic Indicators: A strong economy can lead to increased corporate profits and higher stock prices, benefiting mid-cap companies.
• Sector Growth Prospects: Growth in sectors like technology and healthcare can drive the performance of FNK.
• Interest Rates: Rising interest rates can negatively impact growth stocks, potentially affecting FNK's performance.

Competitors:

• iShares Russell Mid-Cap Value ETF (IWMV)
• Vanguard Mid-Cap Value ETF (VOE)
• SPDR S&P MidCap 400 Value ETF (MDYV)

Expense Ratio:

FNK has an expense ratio of 0.65%.

Investment Approach and Strategy:

Strategy: FNK employs an active factor-based approach to identify and invest in mid-cap stocks with strong growth potential based on factors like value, momentum, and quality.

Composition: The ETF primarily holds U.S. mid-cap stocks across various sectors, with the largest allocations to technology, financials, and healthcare.

Key Points:

• Actively managed mid-cap ETF
• Focuses on value, momentum, and quality factors
• Outperformed its benchmark in most periods
• Strong management team and quantitative model
• Good liquidity and low expense ratio

Risks:

• Market risk: FNK's performance is tied to the overall stock market, which can be volatile.
• Value investing risk: Value stocks may underperform growth stocks during certain market conditions.
• Active management risk: There is no guarantee that the ETF's active management approach will outperform the market.

Who Should Consider Investing:

FNK is suitable for investors seeking:

• Active management and potential outperformance
• Exposure to mid-cap companies with strong growth potential
• Cost-effective access to a factor-based investment strategy

Fundamental Rating Based on AI:

Based on an analysis of financial health, market position, and future prospects using an AI-based system, FNK receives a 7 out of 10.

The rating considers the ETF's performance history, experienced management team, and unique factor-based approach as strengths. However, the potential for market risk and value investing underperformance are seen as weaknesses.

Resources and Disclaimers:

• First Trust Active Factor Mid Cap ETF Website: https://www.ftportfolios.com/web/FT/products/profiling/ETF/overview/FNK
• Morningstar: https://www.morningstar.com/etfs/xnas/fnk/quote
• ETF Database: https://etfdb.com/etf/FNK/

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