First Trust Managed Municipal ETF (FMB)

Overview of First Trust Managed Municipal ETF (FMN)

Profile

First Trust Managed Municipal ETF (FMN) is an actively managed exchange-traded fund that invests primarily in investment-grade municipal bonds. The fund aims to provide investors with current income exempt from federal income taxes and, to a lesser extent, state and local taxes. FMN does not track a specific index but instead relies on a team of experienced portfolio managers to select individual bonds based on their creditworthiness and potential for income generation.

Objective

The primary investment objective of FMN is to generate high current income exempt from federal income taxes. The fund also seeks to provide some capital appreciation, although this is a secondary objective.

Issuer

FMN is issued by First Trust Advisors L.P., a leading provider of exchange-traded funds (ETFs) and other investment products. First Trust is known for its expertise in managing actively managed ETFs and has a strong reputation in the industry. The management team responsible for FMN has extensive experience in fixed income investing and a proven track record of success.

Market Share

FMN has a market share of approximately 2.5% in the actively managed municipal bond ETF space. This makes it one of the larger and more popular actively managed municipal bond ETFs available.

Total Net Assets

As of November 7, 2023, FMN has total net assets of approximately $4.5 billion.

Moat

FMN's competitive advantages include:

• Active management: The fund benefits from the expertise of a dedicated team of portfolio managers who actively select bonds based on their individual merit. This allows the fund to potentially outperform passively managed municipal bond ETFs.
• Experienced management team: The portfolio managers have extensive experience in fixed income investing and a strong track record of success.
• Diversified portfolio: The fund invests in a wide range of municipal bonds across different sectors and maturities, which helps to mitigate risk.

Financial Performance

FMN has a strong track record of performance. The fund has outperformed its benchmark, the S&P Municipal Bond Index, over the past 3, 5, and 10 years.

Growth Trajectory

The municipal bond market is expected to continue to grow in the coming years, driven by factors such as low interest rates and increasing demand for tax-exempt income. This bodes well for FMN's future growth prospects.

Liquidity

FMN is a liquid ETF with an average trading volume of over 1 million shares per day. The bid-ask spread is also relatively tight, indicating that the fund is easy to buy and sell.

Market Dynamics

The municipal bond market is influenced by several factors, including interest rates, economic conditions, and tax policy. These factors can impact the performance of FMN.

Competitors

FMN's main competitors include:

• iShares National Muni Bond ETF (MUB)
• Vanguard Tax-Exempt Bond ETF (VTEB)
• SPDR Nuveen Barclays Short Term Municipal Bond ETF (SHM)

Expense Ratio

FMN has an expense ratio of 0.45%.

Investment Approach and Strategy

FMN employs an active management strategy, where the portfolio managers select individual bonds based on their creditworthiness and potential for income generation. The fund invests primarily in investment-grade municipal bonds with maturities ranging from 1 to 30 years.

Key Points

• Actively managed ETF focused on generating tax-exempt income.
• Strong track record of performance.
• Experienced management team.
• Diversified portfolio of investment-grade municipal bonds.
• Competitive expense ratio.

Risks

The main risks associated with FMN include:

• Interest rate risk: Rising interest rates can lead to a decline in the value of the fund's holdings.
• Credit risk: The fund invests in bonds issued by state and local governments, which carry some risk of default.
• Market risk: The overall performance of the municipal bond market can impact the value of the fund.

Who Should Consider Investing

FMN is suitable for investors seeking:

• Current income exempt from federal income taxes.
• Some capital appreciation potential.
• Exposure to the municipal bond market.