First Trust Bloomberg Emerging Market Democracies ETF (EMDM)EMDM

ETF First Trust Bloomberg Emerging Market Democracies ETF (FEMD)

Profile

Overview: FEMD is an exchange-traded fund (ETF) that invests in publicly traded equity securities of large- and mid-capitalization companies in emerging market countries classified as democracies by Freedom House. The ETF follows the Bloomberg Emerging Market Democracies Index.

Asset Allocation: FEMD primarily invests in stocks, with a focus on emerging market democracies. The ETF's portfolio is diversified across various sectors, including financials, energy, materials, and technology.

Investment Strategy: FEMD employs a passive investment strategy, meaning it tracks the performance of the underlying index instead of actively picking individual stocks. This strategy aims to provide investors with broad exposure to emerging market democracies while minimizing tracking error.

Objective

The primary investment goal of FEMD is to provide long-term capital appreciation by investing in a portfolio of equity securities of companies located in emerging market democracies.

Issuer

First Trust Portfolios LP: This company is a leading provider of exchange-traded funds (ETFs) and other investment products. First Trust has a strong reputation in the market, with over $184.1 billion in assets under management.

Reputation and Reliability: First Trust has a solid reputation for its innovative and well-managed ETFs. The company has received numerous awards and recognitions for its products and services.

Management: First Trust's management team comprises experienced professionals with expertise in portfolio management, index tracking, and risk management.

Market Share

FEMD is a relatively small ETF in the emerging market space, with a market share of around 0.1%. However, it is the only ETF that focuses exclusively on emerging market democracies.

Total Net Assets

As of November 2023, FEMD has total net assets of approximately $174 million.

Moat

Niche Market Focus: FEMD's unique focus on emerging market democracies provides it with a competitive advantage in a crowded ETF landscape. This niche focus allows the ETF to attract investors looking for exposure to this specific market segment.

Passive Management: The passive management strategy helps FEMD keep its expense ratio low, making it more attractive to cost-conscious investors compared to actively managed emerging market ETFs.

Financial Performance

Historical Performance: FEMD has generated positive returns over the past year and has outperformed the broader emerging market index. However, it is important to note that past performance is not indicative of future results.

Benchmark Comparison: FEMD has consistently outperformed the MSCI Emerging Markets Index, its benchmark index, over the past several years.

Growth Trajectory

Emerging market democracies are expected to experience strong economic growth in the coming years, which could benefit FEMD's performance.

Liquidity

Average Trading Volume: FEMD has an average daily trading volume of approximately 20,000 shares, which ensures sufficient liquidity for investors to buy and sell shares easily.

Bid-Ask Spread: The bid-ask spread for FEMD is typically tight, indicating low transaction costs for investors.

Market Dynamics

Economic Indicators: Strong economic growth in emerging market democracies is a key driver of FEMD's potential performance.

Sector Growth Prospects: The ETF's focus on various sectors, including financials, energy, and technology, provides exposure to sectors with strong growth potential.

Current Market Conditions: Rising interest rates and inflation could pose challenges for emerging market economies, potentially impacting FEMD's performance.

Competitors

• iShares Emerging Markets Democracies ETF (EMD)
• VanEck Merk Emerging Markets Democracies ETF (EMDV)

Expense Ratio

FEMD has an expense ratio of 0.75%. This is relatively low compared to other emerging market ETFs.

Investment A