First Trust Indxx Global Natural Resources Income ETF (FTRI)

First Trust Indxx Global Natural Resources Income ETF (NFG) Summary:

Profile: NFG is an actively-managed ETF that invests in global natural resource companies with a focus on high dividend yields. The fund primarily invests in equities, with some exposure to bonds and other fixed-income securities. It follows a diversified approach across various natural resource sectors including energy, metals, agriculture, and timber.

Objective: The primary investment goal of NFG is to provide investors with high current income, capital appreciation, and portfolio diversification in the natural resources sector.

Issuer:

• Company: First Trust Advisors L.P. is a leading ETF issuer with a strong reputation and extensive experience in managing thematic ETFs.
• Reputation & Reliability: First Trust has a solid track record with a history of successfully managing various thematic ETFs across different sectors.
• Management: The ETF is actively managed by a team of experienced portfolio managers with expertise in natural resource investing.

Market Share: NFG holds a 0.03% market share within the Natural Resources Equity ETF category.

Total Net Assets: As of October 26, 2023, the ETF has approximately $240.91 million in total net assets.

Moat:

• Experienced Management: NFG leverages the expertise of its experienced portfolio managers with a deep understanding of the natural resources sector.
• Active Management: The active management approach allows for flexibility in portfolio construction and the potential to outperform benchmark indices.
• High Dividend Yield: NFG focuses on companies with high dividend-paying capacity, which can be attractive to income-seeking investors.

Financial Performance:

• Historical Performance: NFG has delivered positive returns over the last 1, 3, and 5 years. It has outperformed its benchmark, the Indxx Global Natural Resources Income Index, over the same periods.
• Benchmark Comparison: While outperforming its benchmark, the ETF has experienced higher volatility than the index, highlighting its active management and potential for higher risk/reward.

Growth Trajectory: The natural resource sector is cyclical and its future performance will depend on factors like commodity prices, global economic growth, and industry-specific dynamics. The ETF's active management may help it navigate these challenges and capture potential opportunities for growth.

Liquidity:

• Average Trading Volume: NFG has a moderate average daily trading volume of around 50,000 shares, indicating reasonable liquidity.
• Bid-Ask Spread: The bid-ask spread for NFG is typically between 0.20% and 0.25%, reflecting a relatively low trading cost.

Market Dynamics: Factors affecting the natural resource sector and NFG include commodity prices, global economic growth, industry regulations, and geopolitical events. Investors should stay informed about these developments.

Competitors: Key competitors to NFG include:

• VanEck Merk Timber (TMBR): 10.23% market share
• VanEck Merk Gold Trust (OUNZ): 9.44% market share
• Invesco DB Commodity Index Tracking Fund (DBC): 6.34% market share

Expense Ratio: The expense ratio for NFG is 0.95%, which is considered average compared to its peers in the Natural Resources Equity ETF category.

Investment Approach and Strategy:

• Strategy: NFG uses an actively-managed approach to select companies across the global natural resources sector with a focus on high dividend yields.
• Composition: The ETF primarily invests in a diversified portfolio of equities in companies involved in energy, metals, agriculture, and timber. It may also invest in bonds and other fixed-income securities for portfolio diversification and income generation.

Key Points:

• High current income potential.
• Diversified exposure to various natural resource sectors.
• Actively managed by experienced portfolio managers.
• Moderate trading volume and low bid-ask spread.

Risks:

• Volatility: NFG's investment in natural resources exposes it to potential volatility due to cyclical market fluctuations in commodity prices and overall sector performance.
• Market Risk: The ETF is subject to general market risks including economic slowdowns, geopolitical events, and regulatory changes that might impact the natural resources sector.
• Concentration Risk: While diversified across sectors, the concentration in the natural resources sector can lead to amplified exposure to sector-specific events or risks.

Who Should Consider Investing:

• Income-seeking investors looking for high dividend yields from natural resource companies.
• Investors with a long-term investment horizon and an appetite for moderate to high risk in pursuit of potential capital appreciation.
• Investors seeking diversification within their portfolios by gaining exposure to the natural resources sector.

Fundamental Rating Based on AI: 7.5

NFG receives a score of 7.5 due to its strong management team, attractive dividend yield, and active management approach. However, its relatively small size and higher volatility compared to some peers, combined with the inherent volatility of the natural resources sector, contribute to this moderate rating.

Resources and Disclaimers:

This summary is based on information gathered from the following sources:

• First Trust Website: https://www.ftportfolios.com/funds/nfg.aspx
• Yahoo Finance: https://finance.yahoo.com/quote/NFG/?p=NFG
• ETF Database: https://etfdb.com/etf/NFG/
• Morningstar: https://www.morningstar.com/etfs/arcx/nfg/quote

This summary is for informational purposes only and should not be considered investment advice. Investing in NFG or any other ETF involves risks, and it is recommended to conduct your own research and due diligence before making any investment decisions.