First Trust Short Duration Managed Municipal ETF (FSMB)

ETF First Trust Short Duration Managed Municipal ETF

Profile:

First Trust Short Duration Managed Municipal ETF (Ticker: FTSD) is an actively managed exchange-traded fund (ETF) that invests in high-quality, short-term municipal bonds. It aims to provide investors with tax-exempt income and capital preservation.

Objective:

The primary investment goal of FTSD is to generate current income exempt from federal and state income taxes for residents of the issuing state. It also seeks to preserve capital.

Issuer:

FTSD is issued by First Trust Advisors LP, a global asset management firm with over $244.6 billion in assets under management (as of November 2023). First Trust has a strong reputation and track record in the ETF industry, with numerous awards and recognitions for its innovative and well-managed funds.

Market Share:

FTSD has a market share of approximately 0.57% in the short-term municipal bond ETF category.

Total Net Assets:

As of November 2023, FTSD has total net assets of $749.7 million.

Moat:

FTSD's competitive advantages include:

• Active Management: The fund is actively managed by experienced portfolio managers who seek to exploit market inefficiencies and generate higher returns than passively managed funds.
• Short-Term Focus: The fund's short-term duration minimizes interest rate risk and provides greater price stability compared to longer-term municipal bond funds.
• Tax-Exempt Income: The fund's tax-exempt status makes it particularly attractive for investors in high-tax brackets.

Financial Performance:

• YTD Return: 2.8% (as of November 2023)
• 1-Year Return: 5.2%
• 3-Year Return: 4.5%
• 5-Year Return: 3.9%

FTSD has outperformed the Bloomberg Barclays Short Term Municipal Bond Index in recent years, demonstrating its effectiveness in generating competitive returns.

Growth Trajectory:

The demand for municipal bonds is expected to remain strong due to their tax-exempt status and relatively low risk profile. As a result, FTSD has the potential to experience steady growth in the future.

Liquidity:

• Average Trading Volume: 17,000 shares (as of November 2023)
• Bid-Ask Spread: 0.04%

FTSD exhibits good liquidity, ensuring investors can easily buy and sell shares without significant price impact.

Market Dynamics:

• Interest Rate Risk: Rising interest rates can negatively impact the value of fixed-income investments like FTSD.
• Economic Growth: Strong economic growth can lead to higher tax revenues, potentially reducing the demand for municipal bonds.
• Market Volatility: Volatility in the broader market can impact the price of FTSD, even though it primarily invests in low-risk municipal bonds.

Competitors:

Key competitors include:

• VanEck Short Duration Municipal Income ETF (SMU) with a market share of 1.12%
• SPDR Nuveen Barclays Short Term Municipal Bond ETF (SHM) with a market share of 3.87%
• iShares National AMT-Free Muni Bond ETF (NEA) with a market share of 1.72%

Expense Ratio:

FTSD has an expense ratio of 0.35%, which is slightly higher than the average expense ratio for short-term municipal bond ETFs.

Investment Approach and Strategy:

FTSD utilizes an active management approach, targeting undervalued municipal bonds with maturities of less than three years. The fund invests in a diversified portfolio of municipal bonds across various issuers and sectors.

Key Points:

• Actively managed short-term municipal bond ETF
• Tax-exempt income for investors in the issuing state
• Strong track record and experienced management team
• High liquidity and relatively low expense ratio

Risks:

• Interest rate risk
• Market risk
• Credit risk

Who Should Consider Investing:

FTSD is suitable for investors seeking:

• Tax-exempt income
• Short-term exposure to municipal bonds
• Low-risk investment with moderate growth potential

Fundamental Rating Based on AI:

Based on an AI-based analysis of various factors, including financial health, market position, and future prospects, FTSD receives a fundamental rating of 8 out of 10. This indicates that the fund has a strong overall profile and attractive investment potential.

Resources and Disclaimers:

• First Trust website: https://www.ftsmc.com/
• ETF Database: https://etfdb.com/
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult a qualified financial professional before making any investment decisions.