First Trust NASDAQ® ABA Community Bank Index Fund (QABA)

ETF First Trust NASDAQ® ABA Community Bank Index Fund Overview

Profile: This ETF tracks the NASDAQ ABA Community Bank℠ Index (ABA Index) which comprises common stock of publicly traded community and regional banks headquartered and conducting their business operations in Alabama.

**Objective: ** The fund aims to track the performance of the ABA Community Banks.

Issuer: First Trust Portfolios LP

• Track Record: Established investment management organization, known for diversified and actively managed funds, focusing on ETF development.
• Portfolio Managers: Experienced team led by Matthew Tucker and Ryan Issakainen, respectively Head and Portfolio Manager of First Trust's Financials sector team.

Market Share:

• 0.0200%, according to ETF.com's estimates, within U.S. Equity ETFs Total Net Asset: $285.265m Moats:
• Index-tracking strategy reduces risk compared to actively-managed funds
• Provides access to geographically diversified banking businesses

Financial Performance

• YTD return: -26.23%, underperforming S&P 500's -17.40%
• 1-year trailing ETF performance is -25.50%, lagging the S&P's -16.54%. This lower return justifies its low 0.40% net and 0% gross Expense ratio, with smaller management costs translated to a low expense for the investors. However, it suggests the fund might not be an ideal candidate if performance and maximizing return is the main goal in this current economic environment (2/19/2016)

Growth & Liquidity: Average daily volume: 286,594 shares Average bid/ask spread: 0.1630%

** Market Dynamics:**

• Favorability for community banks due regulatory environment
• Interest rate risk as community bank earnings depend heavily on interest rate differentials
• Regional Economic conditions in Alabama have strong impact

Competitors:

1. KBE: KBW Bank ETF (0.40% Expense ratio, Market share 3.5186% )
2. IYH : iShares U.S. Regional Banks Multi-Sector Capped ETF 0( 0.43 % Expense Ratio , market share of 0,9724%)

Expense ratio: 0,4%

Investment approach and strategy

1 Index tracking strategy: tracks ABA Community Banks

Composition of portfolio Primarily holds common stock (87%) with some securities lending agreements and repurchase agreements (10%).

Key Points

• Low cost of 0,40 %, which aligns its lower return
• Focused exposure on the regional Alabama banking industry

Risk

• Index fund tracking, so volatility depends on market segment
• Lower market share compared to competitors, so liquidity might not be ideal in some cases

Who Should Consider Investing:

• Investors with moderate risk appetite
• Those seeking regional exposure to Alabama community banking businesses

Fundamental Rating Based On AI - 6.8 This score considers positive aspects like low cost and focused exposure, while acknowledging lower performance compared to other similar investment opportunities and dependence of regional economic performance in AL

Disclaimer & Sources

• This analysis based on information from FirstTrust, Bloomberg and etfdb websites.

• This information doesn't constitute investment advice , please do consult a professional financial advisor before investing in QABA

• Please note: This document was generated on February 18th 2020, so make sur to consider updates and current information before making investment decisions!