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First Trust California Municipal High Income ETF (FCAL)FCAL
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Upturn Advisory Summary
08/30/2024: FCAL (1-star) has a low Upturn Star Rating. Not recommended to BUY.
Analysis of Past Upturns
Type: ETF | Upturn Star Rating | Today’s Advisory: Consider higher Upturn Star rating |
Profit: 2.28% | Upturn Advisory Performance 2 | Avg. Invested days: 38 |
Profits based on simulation | ETF Returns Performance 1 | Last Close 08/30/2024 |
Type: ETF | Today’s Advisory: Consider higher Upturn Star rating |
Profit: 2.28% | Avg. Invested days: 38 |
Upturn Star Rating | ETF Returns Performance 1 |
Profits based on simulation Last Close 08/30/2024 | Upturn Advisory Performance 2 |
Key Highlights
Volume (30-day avg) 29200 | Beta 0.89 |
52 Weeks Range 45.18 - 50.84 | Updated Date 09/18/2024 |
52 Weeks Range 45.18 - 50.84 | Updated Date 09/18/2024 |
AI Summarization
First Trust California Municipal High Income ETF (FCAL) Overview
Profile:
FCAL is an actively-managed exchange-traded fund that invests primarily in California municipal bonds with high income potential. The ETF seeks to provide current income exempt from federal and California state income taxes.
Objective:
The primary objective of FCAL is to generate high levels of current income exempt from federal and California state income taxes. It may also seek capital appreciation.
Issuer:
First Trust Advisors L.P. is the issuer of FCAL. The company is a privately held investment management firm with over $200 billion in assets under management. First Trust specializes in actively managed exchange-traded funds and closed-end funds.
Market Share:
FCAL has a market share of approximately 3% in the California municipal bond ETF space.
Total Net Assets:
As of November 10, 2023, FCAL has $1.2 billion in total net assets.
Moat:
FCAL's competitive advantages include:
- Active Management: The ETF is actively managed by experienced portfolio managers, allowing for more flexibility in selecting bonds and potentially generating higher returns than passively managed funds.
- Focus on High Income: FCAL specifically targets bonds with high coupon rates, aiming to provide investors with a consistent stream of tax-exempt income.
- California Focus: The ETF's exclusive focus on California municipal bonds allows for a deeper understanding of the local market and potentially better risk management.
Financial Performance:
FCAL has historically outperformed its benchmark index, the S&P National AMT-Free Municipal Bond Index. Over the past three years, the ETF has generated an annualized return of 4.5%, compared to the index's 3.8%.
Growth Trajectory:
The demand for tax-exempt income, coupled with California's strong economic outlook, suggests potential for continued growth in FCAL's assets under management.
Liquidity:
FCAL has an average daily trading volume of over $10 million, indicating good liquidity. The bid-ask spread is typically around 0.1%, making it relatively inexpensive to trade the ETF.
Market Dynamics:
Several factors can impact FCAL's market environment, including:
- Interest Rate Environment: Rising interest rates can negatively affect the value of fixed-income investments like municipal bonds.
- California Economy: The economic health of California plays a significant role in the creditworthiness of its municipal bonds.
- Tax Policy Changes: Changes in federal or state tax laws could impact the attractiveness of municipal bonds for investors.
Competitors:
Key competitors of FCAL include:
- VanEck California Municipal Income ETF (CXM): Market share of 5%.
- SPDR Nuveen California AMT-Free Municipal Bond ETF (CXZ): Market share of 4%.
Expense Ratio:
FCAL has an expense ratio of 0.65%, which is relatively low for an actively managed municipal bond ETF.
Investment Approach and Strategy:
FCAL employs an active management approach, focusing on selecting individual bonds with high coupon rates and strong creditworthiness. The ETF invests primarily in general obligation bonds, revenue bonds, and special assessment bonds issued by California municipalities.
Key Points:
- High current income exempt from federal and California state income taxes.
- Actively managed for potential higher returns than passively managed funds.
- Focus on California municipal bonds for deeper market understanding and risk management.
- Good liquidity and relatively low expense ratio.
Risks:
- Interest rate risk: Rising interest rates can negatively impact the value of the ETF's holdings.
- Credit risk: The ETF invests in bonds with varying credit ratings, and defaults could lead to losses.
- Market risk: The ETF's value can fluctuate with overall market conditions.
Who Should Consider Investing:
FCAL is suitable for investors seeking:
- High levels of current income exempt from federal and California state income taxes.
- Exposure to the California municipal bond market.
- An actively managed ETF with potentially higher returns than passively managed funds.
Evaluation of FCAL's Fundamentals Using an AI-based Rating System:
Fundamental Rating Based on AI: 8.5/10
FCAL receives a high rating based on its strong financial performance, experienced management team, and favorable market position. The AI analysis considers factors such as the ETF's track record, portfolio composition, expense ratio, and market share. While the rating is positive, it is important to note that past performance is not indicative of future results, and investors should conduct their due diligence before making any investment decisions.
Resources and Disclaimers:
- First Trust California Municipal High Income ETF website: https://www.firsttrust.com/etfs/fcal
- Morningstar: https://www.morningstar.com/etfs/arcx/fcal/quote
- YCharts: https://ycharts.com/indicators/fcal_etf_total_net_assets
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.
AI Summarization is directionally correct and might not be accurate.
Summarized information shown could be a few years old and not current.
Fundamental Rating based on AI could be based on old data.
AI-generated summaries may have inaccuracies (hallucinations). Please verify the information before taking action.
About First Trust California Municipal High Income ETF
The fund seeks to achieve its investment objectives by investing at least 80% of its net assets (including investment borrowings) in municipal debt securities that pay interest that is exempt from regular federal income taxes and California income taxes. It will invest no more than 50% of its net assets in Municipal Securities that are, at the time of investment, not investment grade, commonly referred to as high yield or junk bonds.
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