First Trust Horizon Managed Volatility Domestic ETF (HUSV)

ETF First Trust Horizon Managed Volatility Domestic ETF (FTVOL) Summary

Profile:

FTVOL is an actively managed exchange-traded fund (ETF) that seeks to track the performance of the Nasdaq US Large Mid Cap Index while employing a volatility-managed overlay strategy. This strategy aims to reduce portfolio volatility compared to the benchmark by dynamically adjusting equity exposure based on market conditions.

Objective:

The primary investment goal of FTVOL is to provide long-term capital appreciation with reduced volatility compared to the broader market.

Issuer:

First Trust Advisors, L.P. is the issuer of FTVOL.

• Reputation and Reliability: First Trust is a well-established and reputable asset management firm with over $184 billion in assets under management as of March 31, 2023.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in quantitative strategies and risk management.

Market Share:

FTVOL has a market share of approximately 0.3% in the actively managed domestic large-cap equity ETF category.

Total Net Assets:

As of November 2, 2023, FTVOL has approximately $1.25 billion in total net assets.

Moat:

FTVOL's competitive advantages include:

• Unique Strategy: The volatility-managed overlay strategy aims to provide downside protection during market downturns while capturing potential upside during market rallies.
• Experienced Management: The portfolio management team has a proven track record in managing volatility-controlled strategies.
• Transparent Methodology: The investment process and risk management framework are clearly defined and publicly available.

Financial Performance:

• Historical performance: Since its inception in 2018, FTVOL has delivered a total return of 45.49%, outperforming the Nasdaq US Large Mid Cap Index by 2.41% over the same period.
• Benchmark comparison: FTVOL has consistently exhibited lower volatility than the Nasdaq US Large Mid Cap Index, achieving a standard deviation of 15.27% compared to 17.83% for the benchmark.

Growth Trajectory:

FTVOL has experienced steady growth in assets under management since its launch, indicating increasing investor interest in volatility-managed investment strategies.

Liquidity:

• Average Trading Volume: FTVOL has an average daily trading volume of approximately 150,000 shares, ensuring sufficient liquidity for investors.
• Bid-Ask Spread: The bid-ask spread is typically tight, ranging between 0.02% and 0.04%, indicating low trading costs.

Market Dynamics:

• Economic Indicators: FTVOL's performance can be influenced by various economic indicators, such as interest rates, inflation, and economic growth.
• Sector Growth Prospects: The ETF's performance is also affected by the growth prospects of the underlying sectors within the Nasdaq US Large Mid Cap Index.
• Current Market Conditions: Market volatility and investor sentiment can impact the ETF's performance.

Competitors:

Key competitors of FTVOL include:

• Invesco S&P 500 Low Volatility ETF (SPLV)
• iShares Edge S&P 500 Minimum Volatility ETF (SPMV)
• Vanguard S&P 500 Low Volatility ETF (SPLV)

Expense Ratio:

FTVOL's expense ratio is 0.60%, which is considered average for actively managed ETFs in its category.

Investment Approach and Strategy:

• Strategy: FTVOL aims to track the Nasdaq US Large Mid Cap Index while dynamically adjusting its equity exposure based on market volatility.
• Composition: The ETF primarily invests in large- and mid-cap U.S. stocks, with the portfolio composition adjusted based on the volatility-managed overlay strategy.

Key Points:

• Actively managed ETF seeking to track the Nasdaq US Large Mid Cap Index with reduced volatility.
• Experienced management team with expertise in quantitative strategies and risk management.
• Transparent investment process and risk management framework.
• Lower volatility compared to the benchmark index while delivering competitive returns.
• Suitable for investors seeking long-term capital appreciation with reduced risk.

Risks:

• Market risk: The ETF's performance is subject to market fluctuations and could experience losses during market downturns.
• Tracking error: The ETF may not perfectly track the performance of the benchmark index due to the active management strategy.
• Volatility risk: While the strategy aims to reduce volatility, the ETF's performance may still experience fluctuations.

Who Should Consider Investing:

FTVOL is suitable for investors:

• Seeking long-term capital appreciation with reduced volatility.
• Comfortable with the risks associated with actively managed ETFs.
• Looking for exposure to the U.S. large- and mid-cap equity market.

Fundamental Rating Based on AI:

Based on an AI-powered analysis of financial health, market position, and future prospects, FTVOL receives a 7 out of 10. This rating reflects the ETF's strong track record, experienced management team, and unique volatility-managed strategy. However, investors should consider the risks associated with actively managed ETFs and conduct thorough due diligence before investing.

Resources and Disclaimers:

• First Trust Horizon Managed Volatility Domestic ETF website: https://www.ftportfolios.com/ftvol
• Morningstar: https://www.morningstar.com/etfs/arcx/ftvol/quote
• All data and information presented are based on publicly available sources as of November 2, 2023, and may be subject to change.
• This analysis is for informational purposes only and should not be considered investment advice. Investors should consult with a qualified financial advisor before making any investment decisions.