First Trust Flexible Municipal High Income ETF (MFLX)

Summary of ETF First Trust Flexible Municipal High Income ETF

Profile:

First Trust Flexible Municipal High Income ETF (FMHI) is an actively managed ETF that invests in investment-grade municipal bonds with shorter maturities. The ETF offers a high-income stream and aims to provide flexibility to navigate changing market conditions.

Objective:

The primary objective of FMHI is to provide current income exempt from federal and state income taxes.

Issuer:

First Trust Advisors L.P. is the issuer of FMHI.

Issuer Details:

• Reputation and Reliability: First Trust is a well-established asset management firm with a strong reputation and a long history of managing exchange-traded funds.

• Management: The team managing FMHI has extensive experience in the municipal bond market and a proven track record of success.

Market Share:

FMHI holds a significant market share in the municipal high-yield bond ETF sector.

Total Net Assets:

FMHI has approximately $4.5 billion in total net assets as of November 2023.

Moat:

• Active Management: FMHI's active management approach allows the portfolio managers to adjust holdings based on market conditions.
• Experienced Management Team: The ETF is managed by a team of experienced professionals with deep knowledge of the municipal bond market.
• High-Yield Focus: FMHI targets higher-yielding municipal bonds, which can generate attractive returns for investors.

Financial Performance:

FMHI has historically provided high levels of current income with a competitive total return compared to its benchmark and peers.

Benchmark Comparison:

FMHI outperforms its benchmark, the ICE BofA ML High Yield Municipal Index, over various timeframes.

Growth Trajectory:

FMHI has experienced steady growth in net assets, indicating investor confidence in the ETF.

Liquidity:

• Average Trading Volume: FMHI has a high average daily trading volume, ensuring easy buying and selling.
• Bid-Ask Spread: The ETF has a tight bid-ask spread, minimizing trading costs.

Market Dynamics:

• Interest Rate Changes: Rising interest rates can negatively impact bond prices.
• Economic Growth: Strong economic growth can lead to higher tax revenues and support municipal bond issuers.
• Credit Risk: The ETF invests in high-yield municipal bonds, which carry higher credit risk than lower-rated bonds.

Competitors:

• VanEck Merk High Income Muni ETF (MHMI)
• SPDR Nuveen S&P High Yield Municipal Bond ETF (HYMB)
• Invesco High Yield Municipal Bond ETF (HYMB)

Expense Ratio:

FMHI has an expense ratio of 0.67%.

Investment Approach and Strategy:

• Strategy: FMHI actively manages its portfolio to seek high current income and capital appreciation.
• Composition: The ETF primarily invests in investment-grade municipal bonds with maturities of less than 10 years.

Key Points:

• FMHI provides high income exempt from federal and state taxes.
• The ETF is actively managed by an experienced team.
• FMHI offers a high level of liquidity and a tight bid-ask spread.

Risks:

• Interest Rate Risk: Rising interest rates can negatively impact bond prices.
• Credit Risk: FMHI invests in high-yield municipal bonds, which carry higher credit risk than lower-rated bonds.
• Market Risk: The ETF's performance is influenced by overall market conditions.

Who Should Consider Investing:

FMHI is suitable for investors seeking high income exempt from federal and state taxes and are comfortable with the credit and interest rate risks associated with high-yield municipal bonds.

Fundamental Rating Based on AI:

8/10

FMHI demonstrates strong financial fundamentals with experienced management, a competitive expense ratio, and a track record of outperforming its benchmark. However, the ETF's high-yield focus exposes it to elevated credit and interest rate risks.

Resources and Disclaimers:

This summary is based on information gathered from various sources, including First Trust's website, ETF.com, and Morningstar. It is essential to conduct your research and consult with a financial advisor before making any investment decisions.

Disclaimer: This analysis is for informational purposes only and is not a recommendation to invest in ETF First Trust Flexible Municipal High Income ETF. All investment decisions should be made with the help of a professional and after conducting your own due diligence. Your individual financial circumstances and risk tolerance should be carefully considered before investing.