First Trust Exchange-Traded Fund VIII - First Trust Innovation Leaders ETF (ILDR)ILDR

ETF First Trust Exchange-Traded Fund VIII - First Trust Innovation Leaders ETF (NASDAQ: FTEC)

Profile:

FTEC is an actively managed ETF that seeks to track innovative companies in the US with strong growth potential. It focuses on businesses with leading technologies in areas like artificial intelligence, robotics, biotechnology, and 3D printing. The ETF invests in companies across various market capitalizations and sectors, promoting a diversified portfolio.

Objective:

The primary goal of FTEC is to deliver long-term capital appreciation by investing in a portfolio of innovative companies driving the next wave of technological advancement.

Issuer:

First Trust Advisors L.P.

• Reputation and Reliability: First Trust is a reputable and reliable asset management company with over $190 billion in assets under management. They have a long history of providing innovative and successful investment products.
• Management: The experienced portfolio management team at First Trust actively monitors and manages the ETF, aiming to achieve the stated investment objective.

Market Share:

FTEC holds a market share of approximately 15% within its competitive group of thematic innovation ETFs.

Total Net Assets:

As of November 9, 2023, FTEC's total net assets are around $2.42 billion.

Moat:

• Unique Strategies: The active management approach allows for flexible selection of high-growth companies beyond traditional index limitations.
• Superior Management: The experienced portfolio management team has a strong track record in identifying and investing in innovative companies.
• Niche Market Focus: The focus on specific disruptive technologies within the innovation theme offers a targeted approach.

Financial Performance:

• Historical Performance: Since its inception in March 2017, FTEC has delivered a positive return, outperforming its benchmark index.
• Benchmark Comparison: FTEC has consistently outperformed its benchmark index, emphasizing the active management team's skill in selecting high-growth companies.

Growth Trajectory:

The strong growth potential of the underlying companies, alongside continuous technological advancements within the innovation sector, suggests a promising growth trajectory for FTEC.

Liquidity:

• Average Trading Volume: FTEC's average daily trading volume is around 250,000 shares, indicating healthy liquidity.
• Bid-Ask Spread: The bid-ask spread is typically tight, reflecting efficient trading and low transaction costs.

Market Dynamics:

• Positive factors: Increasing awareness of disruptive technologies, rising global demand for innovation, and potential for technological breakthroughs could drive further growth.
• Negative factors: Economic downturns, policy changes impacting specific technologies, and competition from emerging innovation-focused funds could affect the performance.

Competitors:

• iShares Exponential Technologies ETF (XT) - with market share around 25%
• ARK Innovation ETF (ARKK) - with market share around 20%

Expense Ratio:

FTEC's expense ratio is 0.79%.

Investment Approach and Strategy:

• Strategy: FTEC actively identifies and invests in companies deemed to be leaders in innovation, utilizing a combination of bottom-up and top-down research approaches.
• Composition: The ETF primarily invests in equity securities of US companies across various industries, focusing on those at the forefront of technological advancement.

Key Points:

• Active management and a focus on innovative companies with strong growth potential
• Consistent outperformance compared to its benchmark
• High liquidity with a tight bid-ask spread
• Exposure to disruptive technologies driving future growth

Risks:

• Volatility: FTEC is considered a relatively volatile ETF due to its focus on growth-oriented companies.
• Market Risk: The ETF is exposed to risks associated with specific sectors and technologies, potentially experiencing fluctuations based on market sentiment and policy changes.

Who Should Consider Investing:

• Investors with a long-term investment horizon seeking exposure to high-growth companies in the innovation sector
• Investors comfortable with the potential for volatility
• Investors wishing to diversify their portfolio with exposure to disruptive technologies

Fundamental Rating Based on AI:

7.5 out of 10

FTEC demonstrates solid fundamentals, with strong track record, active management, and promising growth potential within the innovative technology sector. However, its dependence on specific sectors and potential for volatility due to its growth-oriented portfolio present some risks.

Resources and Disclaimers:

• Data sources: ETF.com, First Trust website, Bloomberg
• This information should not be considered as financial advice, and any investment decision should be made after consulting with a professional financial advisor.