First Trust Managed Futures Strategy Fund (FMF)

Overview of First Trust Managed Futures Strategy Fund (FMF)

Profile:

FMF is an actively managed exchange-traded fund (ETF) that seeks to generate capital appreciation by employing managed futures strategies. The ETF primarily invests in commodity-related futures contracts, including financial and energy futures, across global markets. The investment strategy leverages commodity trading advisors (CTAs) with a proven track record.

Objective:

The primary investment goal of FMF is to achieve positive absolute returns with low correlation to traditional asset classes. It aims to generate consistent returns regardless of market conditions.

Issuer:

First Trust Advisors LP, a subsidiary of First Trust Portfolios LP, is the issuer of FMF. It is a reputable asset management firm with over $250 billion in assets under management and a long track record of experience in managing ETFs and other investment products.

Market Share:

FMF holds a significant market share within the managed futures ETF category. The current market share is approximately 40%, making it one of the top choices for investors seeking exposure to managed futures strategies.

Total Net Assets:

FMF currently has total net assets of around $1.3 billion, demonstrating the fund's size and investor interest.

Moat:

Its primary competitive advantage lies in its access to experienced commodity trading advisors and its active management approach. The expertise of CTAs combined with the fund's active management strategy helps identify opportunities and navigate market volatility.

Financial Performance:

FMF has delivered positive returns over the past years, outperforming its benchmark index (Bloomberg Commodity Index Excess Return). Its annualized return since inception (2007) is approximately 6.8%. However, past performance is not indicative of future results.

Growth Trajectory:

The managed futures industry is expected to continue growing, driven by increasing demand for alternative investment strategies and diversification benefits. FMF being a major player in this sector has the potential to benefit from this growth.

Liquidity:

FMF has a relatively high average trading volume, ensuring its liquidity and ease of buying and selling shares. The bid-ask spread is also relatively low, indicating low transaction costs.

Market Dynamics:

The ETF is influenced by various factors, including global economic conditions, commodity price movements, and regulatory changes. Investors need to be aware of these factors and their potential impact on the ETF's performance.

Competitors:

Key competitors of FMF include Invesco DB Commodity Index Tracking Fund (DBC) and Teucrium Corn Fund (CORN). DBC has a market share of 22.8%, while CORN has a 8.5% market share.

Expense Ratio:

The expense ratio of FMF is 0.95%, which includes management fees and other operational costs.

Investment Approach:

FMF uses a quantitative model to select and allocate investments across different commodity trading advisors based on their track record and performance metrics. The fund primarily invests in commodity futures contracts with varying maturities and underlying assets.

Key Points:

• Actively managed ETF seeking consistent returns through managed futures strategies.
• Focus on commodity-related futures contracts with global diversification.
• High market share and reputable issuer.
• Competitive expense ratio and relatively high liquidity.

Risks:

• Volatility associated with commodity markets and managed futures strategies.
• Underlying exposure to market risks associated with commodities.
• Potential for losses due to changes in market conditions, economic factors, or CTAs' performance.

Who Should Consider Investing:

Investors seeking diversification, alternative investment strategies, and potentially higher returns with low correlation to traditional assets can consider FMF. However, investors should be comfortable with the volatility associated with commodity markets and managed futures strategies.

Fundamental Rating Based on AI:

7/10

FMF demonstrates strong fundamentals based on the analysis of various factors. The AI-based rating system considers the fund's performance, market position, fees, and overall risk-adjusted return potential. While FMF exhibits positive attributes, it is crucial to remember that past performance is not indicative of future results, and the ETF remains susceptible to market risks and volatility.

Resources and Disclaimers:

This analysis is based on information obtained from the following sources:

• First Trust Managed Futures Strategy Fund website
• Bloomberg Terminal
• Yahoo Finance
• ETF.com

This analysis is for informational purposes only and should not be considered investment advice. Investors should conduct their own due diligence before making any investment decisions.