First Trust S&P REIT Index Fund (FRI)

ETF First Trust S&P REIT Index Fund Summary

Profile:

The ETF First Trust S&P REIT Index Fund (Ticker: FREL) is a passively managed exchange-traded fund that tracks the S&P REIT Index. This index comprises equity REITs in the United States across various property types, including residential, commercial, retail, and industrial. FREL aims to provide exposure to the U.S. REIT market, offering diversification and income potential.

Objective:

The primary investment goal of FREL is to track the performance of the S&P REIT Index, providing investors with a convenient way to invest in a diversified portfolio of REITs. The fund focuses on replicating the index's performance by investing in its underlying holdings.

Issuer:

First Trust Advisors L.P. serves as the issuer of FREL. Established in 1991, First Trust is a recognized provider of exchange-traded funds and other investment products. It boasts a robust reputation for experience and expertise in managing ETFs across various asset classes.

Market Share and Total Net Assets:

FREL holds approximately 0.4% of the overall REIT ETF market share. As of November 09, 2023, the fund's total net assets stand at roughly $4.14 billion.

Moat:

FREL's competitive advantages include:

• Passive Management: Passive management translates to lower expense ratios, making the fund attractive for cost-conscious investors.
• Diversification: By investing in a broad range of REITs, FREL reduces portfolio volatility and offers exposure to multiple property types.
• Liquidity: FREL enjoys high trading volume, ensuring easy buying and selling of the fund.

Financial Performance and Benchmark Comparison:

FREL has historically delivered returns closely tracking the S&P REIT Index. The fund's performance has varied over time, influenced by broader market conditions and economic factors.

Growth Trajectory:

The U.S. REIT market is expected to experience continued growth, driven by factors such as population growth, urbanization, and e-commerce. This positive outlook suggests potential for FREL's growth trajectory.

Liquidity:

FREL exhibits high liquidity, with an average daily trading volume exceeding 100,000 shares. The fund's bid-ask spread is relatively tight, indicating low transaction costs.

Market Dynamics:

Essential factors affecting FREL's market environment include:

• Interest Rates: REITs are sensitive to interest rate changes, as higher rates can impact their borrowing costs and potentially lower their valuations.
• Economic Growth: Strong economic growth typically benefits REITs, driving demand for real estate and property values.
• Real Estate Market: Performance of the broader real estate market significantly impacts REITs.

Competitors:

Key competitors of FREL in the REIT ETF space include:

• Vanguard REIT ETF (VNQ) - Market Share: 33.8%
• iShares U.S. Real Estate ETF (IYR) - Market Share: 16.8%
• Real Estate Select Sector SPDR Fund (XLRE) - Market Share: 7.6%

Expense Ratio:

FREL has an expense ratio of 0.60%, which is lower than the average expense ratio for REIT ETFs.

Investment Approach and Strategy:

FREL employs a passive investment strategy, tracking the S&P REIT Index. The fund holds a diversified portfolio of REITs, mirroring the index's composition.

Key Points:

• Focuses on providing exposure to the U.S. REIT market.
• Passively managed, offering lower expense ratios.
• Provides diversification across various property types.
• High liquidity and tight bid-ask spread.
• Potential for growth due to positive outlook for the U.S. REIT market.

Risks:

• Market Risk: REITs are sensitive to market fluctuations and economic downturns.
• Interest Rate Risk: Rising interest rates can negatively impact REIT performance.
• Property Type Risk: Performance can vary depending on the specific property type held by the underlying REITs.

Who Should Consider Investing:

FREL is suitable for investors seeking:

• Exposure to the U.S. REIT market.
• Passive investment strategy with low expense ratios.
• Diversification across various property types.
• Income potential from REIT dividends.

AI-Based Fundamental Rating:

Based on an AI-powered analysis considering financial health, market position, and future prospects, FREL receives a fundamental rating of 7.5 out of 10. The AI system indicates strong fundamentals, supported by the fund's low expense ratio, diversified portfolio, and positive market outlook.

Resources and Disclaimers:

This analysis is based on publicly available information as of November 09, 2023, and sourced from the following websites:

• First Trust Advisors L.P.: https://www.ftsadvisor.com/
• Morningstar: https://www.morningstar.com/etfs/fxna/frel
• ETF.com: https://www.etf.com/etf/frel

This information should not be considered financial advice. Please consult with a professional financial advisor before making any investment decisions.