First Trust Managed Municipal ETF (FMB)

First Trust Managed Municipal ETF (FEM) Summary

Profile: FEM is an actively managed closed-end fund that invests in a portfolio of investment-grade municipal bonds issued by states, municipalities, and other government entities. It focuses on maximizing tax-exempt income for investors.

Objective: The primary goal of FEM is to provide investors with a high level of current income exempt from federal and state income taxes.

Issuer: First Trust Advisors L.P. is the issuer of FEM. Founded in 1990, it is a reputable and experienced investment manager with over $185 billion in assets under management.

Market Share: FEM is the largest closed-end municipal bond fund with a market share of approximately 10% within its category.

Total Net Assets: As of October 27, 2023, FEM has total net assets of approximately $3.5 billion.

Moat: FEM's competitive advantages include its experienced management team, strong track record, and access to a diversified portfolio of municipal bonds. It also benefits from its actively managed approach, which allows the portfolio managers to adjust the holdings based on market conditions.

Financial Performance: FEM has a long history of delivering high and consistent income. Over the past 10 years, it has distributed an average annual distribution of 5.2%, exceeding the average closed-end municipal bond fund. It has outperformed the ICE BofAML US Municipal AA Index over the same period, demonstrating its effective investment strategy.

Growth Trajectory: FEM's historical performance indicates a relatively stable growth trajectory. The fund's net asset value has steadily increased over the past few years despite market fluctuations.

Liquidity: FEM has a high average trading volume, making it a highly liquid ETF. The tight bid-ask spread ensures low costs associated with trading the shares.

Market Dynamics: Key factors affecting FEM's market environment include interest rate changes, economic conditions, and tax policies. Rising interest rates can negatively impact the value of fixed-income investments; however, FEM's focus on high-quality bonds mitigates this risk.

Competitors: Major competitors of FEM include MUTF Closed-End Municipal Funds (MHD), BlackRock MuniHoldings Investment Quality Fund (MHD), and Nuveen Select Tax-Free Income Portfolio (NXP). These funds offer similar investment objectives and strategies.

Expense Ratio: FEM has an expense ratio of 0.75%.

Investment approach and strategy: FEM employs an active management approach and invests in a diversified portfolio of investment-grade municipal bonds. The portfolio managers prioritize maximizing tax-exempt income while managing interest rate risk and credit risk.

Key Points:

• High current income exempt from federal and state taxes
• Long history of consistent distributions
• Experienced management team and access to a diversified portfolio
• Active management approach
• High liquidity

Risks:

• Interest rate risk: Rising interest rates can lead to a decrease in the fund's net asset value.
• Credit risk: The possibility of defaults by issuers of municipal bonds can impact the fund's performance.
• Market risk: Overall market fluctuations can influence the value of the fund's holdings.

Who Should Consider Investing:

• Investors seeking current income exempt from federal and state taxes
• Risk-averse investors seeking a relatively safe and stable investment
• Investors looking for a portfolio diversification strategy

Fundamental Rating Based on AI: 8/10

FEM demonstrates strong financial performance, market position, and future prospects. Its experienced management, active management approach, and access to a diversified portfolio contribute to its competitive edge. However, the risks associated with interest rates and creditworthiness cannot be ignored. The overall score of 8 reflects a positive evaluation of FEM's fundamentals.

Resources and Disclaimers:

• First Trust Managed Municipal ETF (FEM) website: https://www.firsttrust.com/etf/etf-detail.aspx?symbol=FEM
• Morningstar: https://www.morningstar.com/etfs/xnys/fem
• ICE BofAML US Municipal AA Index: https://www.bofa.com/en-us/resources/fixed-income/ice-bofa-ml-us-municipal-aa-index.html
• Please note that this information is for informational purposes only and should not be considered financial advice. It is recommended to consult with a qualified financial advisor before making any investment decisions.