First Trust S&P REIT Index Fund (FRI)FRI

ETF First Trust S&P REIT Index Fund Overview

Profile:

The First Trust S&P REIT Index Fund (ticker: FREL) is an ETF that tracks the S&P REIT Index, which includes equity REITs in a variety of sectors, including residential, office, retail, industrial, and healthcare. The fund passively invests in the index, aiming to replicate its performance. It has an expense ratio of 0.40%.

Objective:

The primary investment goal of FREL is to provide investment results that, before expenses, generally correspond to the price and yield performance of the S&P REIT Index.

Issuer:

First Trust Advisors L.P. is the issuer of FREL. They are a well-established and reputable asset management firm with over $183 billion in assets under management. The firm has a strong track record in the ETF industry, managing a diverse range of index and actively managed funds.

Market Share:

FREL has a market share of approximately 2.5% within the REIT ETF space.

Total Net Assets:

As of October 26, 2023, FREL has approximately $1.2 billion in total net assets.

Moat:

FREL's main competitive advantages include:

• Low expense ratio: Compared to other REIT ETFs, FREL's expense ratio is relatively low, making it a cost-effective option for investors.
• Diversification: The fund's broad exposure across various REIT sectors provides diversification benefits, reducing the impact of individual stock performance on the overall portfolio.
• Liquidity: FREL is a highly liquid ETF with an average daily trading volume of over 1 million shares.

Financial Performance:

FREL has generally tracked the performance of the S&P REIT Index closely. Over the past 5 years, the fund has returned an average of 10.2% annually, compared to the index's 10.5% return.

Benchmark Comparison:

FREL's performance has been in line with the S&P REIT Index, indicating that the fund has effectively tracked its benchmark.

Growth Trajectory:

The REIT sector is expected to experience moderate growth in the coming years, driven by factors such as population growth, urbanization, and e-commerce.

Liquidity:

FREL has high liquidity, with an average daily trading volume of over 1 million shares. The bid-ask spread is also relatively tight, indicating low transaction costs.

Market Dynamics:

The REIT sector is affected by various factors, including interest rates, economic growth, and government policies. Rising interest rates can negatively impact REIT performance, while strong economic growth can boost demand for REIT properties.

Competitors:

Key competitors of FREL include:

• Vanguard REIT ETF (VNQ): 35.5% market share
• iShares U.S. Real Estate ETF (IYR): 25.5% market share
• SPDR Dow Jones REIT ETF (RWR): 15.5% market share

Expense Ratio:

The expense ratio of FREL is 0.40%. This includes management fees and other operational costs.

Investment Strategy:

FREL passively tracks the S&P REIT Index, investing in the same constituents and weights as the index. The fund's composition primarily consists of equity REITs across various sectors.

Key Points:

• Low-cost and diversified REIT ETF
• Tracks the S&P REIT Index
• High liquidity
• Strong track record of performance

Risks:

• REITs are subject to interest rate risk, as rising rates can decrease the value of their properties.
• The REIT sector is also sensitive to economic conditions, as economic downturns can lead to lower demand for REIT properties.
• FREL's performance is directly tied to the performance of the S&P REIT Index, meaning it inherits the risks associated with the underlying index constituents.

Who Should Consider Investing:

FREL is suitable for investors seeking:

• Exposure to the REIT sector
• Diversification within their portfolio
• A passive and low-cost investment option

Fundamental Rating Based on AI:

Based on an AI analysis, FREL receives a 7 out of 10 rating. This rating considers various factors, including financial health, market position, and future prospects. The analysis indicates that FREL is a well-managed and diversified ETF with a strong track record. However, investors should be aware of the risks associated with the REIT sector before investing.

Resources:

• First Trust S&P REIT Index Fund website: https://www.firsttrust.com/etfs/fre
• S&P REIT Index: https://us.spindices.com/indices/equity/sp-reit-select-index

Disclaimer:

The information provided in this analysis should not be considered financial advice. Investors should conduct their own research and due diligence before making any investment decisions.