First Trust TCW Securitized Plus ETF (DEED)DEED

Overview of ETF First Trust TCW Securitized Plus ETF (NYSEARCA: TCP)

Profile:

• Focus: Invests in a diversified portfolio of securitized assets, primarily mortgage-backed securities (MBS), asset-backed securities (ABS), and agency residential mortgage-backed securities (agency RMBS).
• Allocation: 82% MBS, 15.2% ABS, 2.8% agency RMBS (as of October 26, 2023).
• Strategy: Actively managed, seeking to generate income and capital appreciation through a combination of security selection and interest rate management.

Objective:

• To provide investors with current income and long-term capital appreciation.

Issuer:

• First Trust Advisors L.P.: A leading provider of exchange-traded funds (ETFs) and other investment products.
• Reputation and Reliability: Strong reputation with over 150 ETFs managing over $147 billion in assets (as of August 31, 2023).
• Management: Experienced team led by portfolio managers with extensive expertise in securitized investments.

Market Share:

• TCP: 0.3% market share in the securitized ETF space.
• Largest competitor (iShares MBS ETF): 62.9% market share.

Total Net Assets:

• $1.23 billion (as of October 26, 2023).

Moat:

• Active Management: Leverages the expertise of TCW, a leading fixed income manager, to navigate the complex securitized market.
• Diversification: Spreads investments across various securitized asset classes, mitigating concentration risk.
• Liquidity: Provides daily liquidity through exchange trading.

Financial Performance:

• Year-to-date return (as of October 26, 2023): 1.4%
• Trailing 12-month return: 11.5%
• Outperformed the Bloomberg US MBS Index by 0.4% YTD.

Growth Trajectory:

• Growth in the securitized market is expected, driven by factors such as rising interest rates and demand for fixed income investments.
• TCP is well-positioned to benefit from this growth with its active management and diversified approach.

Liquidity:

• Average trading volume: 132,000 shares
• Bid-ask spread: 0.04%

Market Dynamics:

• Interest rate environment: Rising interest rates are generally positive for securitized investments, as they increase the income generated by these assets.
• Economic growth: Strong economic growth can lead to increased demand for securitized assets, as investors seek higher yields.
• Market volatility: Increased market volatility can create opportunities for active managers to generate alpha.

Competitors:

• iShares MBS ETF (MBB): 62.9% market share.
• VanEck Mortgage REIT Income ETF (MORT): 2.7% market share.
• Invesco Agency MBS ETF (MBG): 2.4% market share.

Expense Ratio:

• 0.50%

Investment Approach and Strategy:

• Strategy: Actively managed, focusing on income generation and capital appreciation.
• Composition: Primarily invests in agency RMBS, MBS, and ABS.

Key Points:

• Actively managed by TCW, a leading fixed income manager.
• Diversified portfolio of securitized assets.
• Provides income and capital appreciation potential.
• Daily liquidity through exchange trading.

Risks:

• Interest rate risk: Rising interest rates can lead to a decline in the value of securitized assets.
• Credit risk: The risk that the issuers of the underlying securities may default on their obligations.
• Prepayment risk: The risk that the underlying mortgages may be paid off early, reducing the income generated by the ETF.

Who Should Consider Investing:

• Investors seeking income and capital appreciation from a diversified portfolio of securitized assets.
• Investors who are comfortable with the risks associated with securitized investments.
• Investors looking for an actively managed ETF with a strong track record.

Fundamental Rating Based on AI:

7/10

Analysis:

• TCP has a strong track record of outperforming its benchmark.
• The ETF is actively managed by a team of experienced portfolio managers.
• The securitized market is expected to grow in the coming years.
• The expense ratio is relatively low.

Risks:

• Interest rate risk is a major concern for securitized investments.
• The ETF is relatively small, which could lead to lower liquidity.

Overall, TCP is a well-managed ETF with a strong track record. However, investors should be aware of the risks associated with securitized investments.

Resources and Disclaimers:

• First Trust TCW Securitized Plus ETF website: https://www.firsttrust.com/etfs/tcp
• Morningstar: https://www.morningstar.com/etfs/arcx/tcp/quote
• Yahoo Finance: https://finance.yahoo.com/quote/TCP/
• SEC Filing: https://www.sec.gov/Archives/edgar/data/1046004/0001104600423027405/tcp424b3wp.htm

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.