First Trust SMID Growth Strength ETF (FSGS)

ETF Summary: First Trust SMID Growth Strength ETF (FNY)

Profile:

• Target Sector: Small-cap growth stocks
• Asset Allocation: 100% equities
• Investment Strategy: Focuses on small-cap stocks with high potential for earnings growth and robust financial strength. The ETF uses a quantitative model to identify stocks with strong fundamentals and positive analyst revisions.

Objective:

• Seek long-term capital growth by investing in small-cap growth stocks with strong financial characteristics.

Issuer:

• First Trust Portfolios L.P.
• Reputation and Reliability: Renowned asset manager with over $183.5 billion in assets under management (as of February 2023). Established in 1990, First Trust has a strong reputation for innovative and actively managed ETF products.
• Management: Experienced portfolio management team with expertise in quantitative analysis and fundamental research.

Market Share:

• Market share: 0.59% within the US Small Cap Growth Equity ETF category.

Total Net Assets:

• $1.98 billion (as of November 10, 2023).

Moat:

• Quantitative Model: The ETF's proprietary quantitative model utilizes various factors to identify undervalued growth stocks with strong financials. This approach helps differentiate FNY from other small-cap growth ETFs.
• Active Management: The portfolio is actively managed, allowing for flexibility in adjusting holdings based on market conditions and model signals.

Financial Performance:

• Average Annual Return (3 years): 12.06%
• Average Annual Return (5 years): 14.60%
• Year-to-Date Return (as of November 10, 2023): 10.54%
• Benchmark Comparison: Outperformed the Russell 2000 Growth Index over the past 3 and 5 years.

Growth Trajectory:

• The ETF has experienced consistent growth in assets under management, indicating increasing investor interest.
• Underlying small-cap growth stocks have historically outperformed broader market indices over the long term.

Liquidity:

• Average Trading Volume: 115,000 shares
• Bid-Ask Spread: 0.11%

Market Dynamics:

• Positive Factors: Strong U.S. economic growth, increased investor risk appetite, and continued innovation in the technology and healthcare sectors can benefit small-cap growth stocks.
• Negative Factors: Rising interest rates, inflation, and global economic uncertainty could pose challenges for small-cap growth companies.

Competitors:

• iShares Russell 2000 Growth ETF (IWO): 32.05% market share
• Vanguard Small-Cap Growth ETF (VBK): 19.60% market share
• SPDR S&P 600 Small Cap Growth ETF (SLYG): 17.20% market share

Expense Ratio:

• 0.60%

Investment Approach and Strategy:

• Strategy: Actively managed, utilizing a quantitative model to identify undervalued small-cap growth stocks.
• Composition: Holds around 200 stocks primarily in the technology, healthcare, and consumer discretionary sectors.

Key Points:

• Invests in high-growth potential small-cap stocks with strong financial characteristics.
• Outperformed benchmark indices over the past 3 and 5 years.
• Actively managed with a unique quantitative model.
• Relatively low expense ratio.

Risks:

• Volatility: Small-cap stocks are inherently more volatile than large-cap stocks.
• Market Risk: Performance is highly dependent on the performance of small-cap growth stocks, which can be affected by economic conditions and industry-specific factors.

Who Should Consider Investing:

• Investors seeking long-term capital growth potential and willing to tolerate higher volatility.
• Investors who believe in the long-term growth potential of small-cap companies.
• Investors seeking exposure to a diversified portfolio of small-cap growth stocks.

Fundamental Rating Based on AI:

8.5/10

Justification:

• Strong track record of outperformance.
• Experienced management team.
• Unique quantitative model for stock selection.
• Relatively low expense ratio.
• Market dynamics favor growth stocks.

Resources and Disclaimers:

• Data sources: ETF.com, First Trust Portfolios, Morningstar
• This information is for educational purposes only and should not be considered investment advice. Investing involves risk, and the value of investments can fluctuate. Carefully consider your investment objectives, risk tolerance, and individual circumstances before making any investment decisions.