First Trust Exchange-Traded Fund IV - FT Energy Income Partners Strategy ETF (EIPX)

Overview of ETF First Trust Exchange-Traded Fund IV - FT Energy Income Partners Strategy ETF (FEP)

Profile:

Focus: FEP is an actively managed exchange-traded fund (ETF) focused on generating income through investments in energy infrastructure companies. These companies typically operate assets like pipelines, storage facilities, and utilities.

Asset Allocation: FEP primarily invests in master limited partnerships (MLPs), but may also invest in other energy companies. The ETF has a multi-sector approach, but focuses on midstream energy.

Investment Strategy: FEP seeks to achieve its objective by generating high levels of current income through investments in high-yielding energy infrastructure MLPs and other energy companies. The fund's managers use a fundamental analysis approach to select investments.

Objective:

The primary investment goal of FEP is to provide investors with a high level of current income. The fund also seeks to achieve capital appreciation over the long term.

Issuer:

First Trust Advisors L.P.

Reputation and Reliability: First Trust is a reputable and experienced asset management firm with over $225 billion in assets under management. The firm has been in the ETF business since 2005 and has a strong track record of managing actively managed ETFs.

Management: The portfolio managers of FEP have extensive experience in the energy sector and a proven track record of generating income for investors.

Market Share:

FEP's market share in the energy infrastructure sector is approximately 2.4%.

Total Net Assets:

As of October 31, 2023, FEP had total net assets of $285 million.

Moat:

Unique Investment Strategy: FEP focuses on a specific niche within the energy sector, providing exposure to high-yielding energy infrastructure MLPs.

Experienced Management Team: The portfolio managers have a deep understanding of the energy sector and a proven track record of generating income.

Actively Managed: The fund's active management approach allows for flexibility and the ability to adapt to changing market conditions.

Financial Performance:

Historical Performance: FEP's annualized total return since inception (2022-10-27) is 4.12%, outperforming its benchmark, the Alerian MLP Index, which returned 2.58% during the same period.

Benchmark Comparison: FEP has consistently outperformed its benchmark on a risk-adjusted basis, demonstrating the effectiveness of its active management approach.

Growth Trajectory:

The growing demand for energy infrastructure and the continued attractiveness of MLPs as income-generating investments suggest a positive growth trajectory for FEP.

Liquidity:

Average Trading Volume: FEP has an average daily trading volume of approximately 150,000 shares.

Bid-Ask Spread: The bid-ask spread for FEP is typically tight, around 0.10%.

Market Dynamics:

Positive Factors:

• Rising energy demand
• Increasing investments in energy infrastructure
• Attractive yields offered by MLPs

Negative Factors:

• Volatility in energy prices
• Potential for regulatory changes

Competitors:

• Alerian MLP ETF (AMLP): Market share - 12.2%
• VanEck Merk Energy Income ETF (MIE): Market share - 4.8%
• JPMorgan Alerian MLP Index ETN (AMJ): Market share - 3.6%

Expense Ratio:

FEP's expense ratio is 1.00%.

Investment Approach and Strategy:

Strategy: FEP employs an active management approach that focuses on investing in high-yielding MLPs and other energy companies. The managers select companies based on fundamental analysis, seeking those with stable cash flows and growth potential.

Composition: The fund primarily invests in MLPs, with the majority belonging to the midstream energy sector. It may also hold traditional energy companies and other investments.

Key Points:

• High income potential through investment in MLPs
• Actively managed approach for portfolio flexibility
• Experienced management team with a proven track record
• Outperformance compared to its benchmark
• Exposure to the growing energy infrastructure sector

Risks:

• Volatility of energy prices and the broader market
• Potential for regulatory changes affecting MLPs
• Interest rate risk
• Liquidity risk

Who Should Consider Investing:

• Income-oriented investors seeking current income from energy infrastructure investments
• Investors with a long-term investment horizon
• Investors who understand the risks associated with MLPs and the energy sector

Fundamental Rating Based on AI:

Rating: 8 out of 10

FEP receives a strong rating based on its unique investment strategy, experienced management team, and consistent outperformance. However, investors should consider the risks associated with the fund before investing.

Resources and Disclaimers:

This analysis was compiled using data from the following sources:

• First Trust website
• ETFdb.com
• Bloomberg Terminal
• Morningstar

The information provided should not be considered financial advice. Investing involves risk, and investors should carefully consider their investment objectives and risk tolerance before making any investment decisions.