First Trust Ultra Short Duration Municipal (FUMB)

ETF First Trust Ultra Short Duration Municipal Summary

Profile:

The First Trust Ultra Short Duration Municipal ETF (USDX) is a fixed-income exchange-traded fund that invests in short-term municipal bonds with maturities of less than three years. It aims to provide investors with high current income and capital preservation. USDX is passively managed and seeks to track the ICE BofAML US 1-3 Year Municipal Index.

Objective:

The primary investment goal of USDX is to generate high current income exempt from federal income tax. It is suitable for investors seeking short-term income and capital preservation in a tax-efficient manner.

Issuer:

First Trust Advisors L.P. is the issuer of USDX. It is a leading ETF provider with over 200 ETFs under management and over $174 billion in assets. First Trust has a strong reputation in the ETF industry, with a track record of providing innovative and well-managed products.

Market Share:

USDX has a market share of approximately 4.4% in the Short-Term Municipal Bond ETF category. It is the third-largest ETF in this category, behind the iShares Short Treasury Bond ETF (SHV) and the Vanguard Short-Term Treasury ETF (VGSH).

Total Net Assets:

USDX has total net assets of approximately $4.4 billion as of November 10, 2023.

Moat:

USDX's competitive advantages include its low expense ratio, its focus on high-quality municipal bonds, and its track record of providing consistent returns. The ETF also benefits from its liquidity and its passive management approach.

Financial Performance:

USDX has a historical yield to maturity of approximately 3.2% as of November 10, 2023. It has outperformed its benchmark index, the ICE BofAML US 1-3 Year Municipal Index, over the past one, three, and five years.

Growth Trajectory:

The market for short-term municipal bonds is expected to grow in the coming years due to increasing demand for tax-exempt income. This bodes well for USDX's future growth prospects.

Liquidity:

USDX has an average trading volume of approximately 1.5 million shares per day. The bid-ask spread is typically around 0.02%.

Market Dynamics:

The main factors affecting USDX's market environment include interest rate changes, economic growth, and the credit quality of municipal bonds.

Competitors:

Key competitors of USDX include:

• iShares Short Treasury Bond ETF (SHV)
• Vanguard Short-Term Treasury ETF (VGSH)
• SPDR Bloomberg Barclays Short Term Municipal Bond ETF (SHM)

Expense Ratio:

USDX has an expense ratio of 0.15%.

Investment Approach and Strategy:

USDX is passively managed and seeks to track the ICE BofAML US 1-3 Year Municipal Index. The ETF invests in a diversified portfolio of short-term municipal bonds with maturities of less than three years.

Key Points:

• High current income exempt from federal income tax
• Short-term duration for capital preservation
• Low expense ratio
• Track record of consistent returns
• Liquidity

Risks:

• Interest rate risk: Rising interest rates could lead to a decline in the value of USDX's holdings.
• Credit risk: The credit quality of municipal bonds can vary, and defaults can occur.
• Market risk: USDX's value can fluctuate with changes in the overall market.

Who Should Consider Investing:

USDX is suitable for investors seeking:

• High current income exempt from federal income tax
• Short-term investments with low volatility
• Tax-efficient income generation

Fundamental Rating Based on AI:

Based on an AI-based rating system, USDX receives a 7.5 out of 10. The rating is based on the ETF's strong financial performance, competitive advantages, and favorable market dynamics. However, investors should be aware of the risks associated with USDX, such as interest rate risk and credit risk.

Resources and Disclaimers:

• First Trust Ultra Short Duration Municipal ETF (USDX): https://www.firsttrust.com/etfs/usdx
• ICE BofAML US 1-3 Year Municipal Index: https://www.spdji.com/indices/index-info/?indexId=US13035
• Morningstar: https://www.morningstar.com/etfs/arcx/usdx/quote

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a financial professional before making any investment decisions.