First Trust Exchange-Traded Fund II - First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD)RBLD

ETF Profile: First Trust Exchange-Traded Fund II - First Trust Alerian U.S. NextGen Infrastructure ETF (NASDAQ: NGEN)

Profile: NGEN is an actively managed ETF that invests in companies involved in the development and operation of next-generation infrastructure in the US. This includes sectors like renewable energy, energy storage, electric vehicle charging stations, and sustainable water infrastructure.

Objective: NGEN's primary goal is to achieve long-term capital appreciation by investing in a diversified portfolio of US companies positioned to benefit from the growth of next-generation infrastructure.

Issuer:

• First Trust Advisors L.P.: A reputable asset management firm with over 25 years of experience and over $200 billion in assets under management.
• Alerian: A leading provider of data, analytics, and research focused on the US energy infrastructure sector.

Market Share: NGEN is a relatively new ETF launched in 2021 and currently holds a small market share within the infrastructure ETF space.

Total Net Assets: As of November 8, 2023, NGEN has approximately $300 million in total assets under management.

Moat: NGEN's competitive advantages include:

• Unique Strategy: Focuses on the emerging next-generation infrastructure segment, offering exposure to a rapidly growing sector.
• Experienced Management: Benefits from the combined expertise of First Trust and Alerian in managing infrastructure investments.
• Active Management: Allows for greater flexibility in portfolio selection and potentially higher returns compared to passively managed infrastructure ETFs.

Financial Performance: While NGEN has a limited track record, it has outperformed its benchmark index since its inception.

Benchmark Comparison: NGEN has outperformed the S&P 500 Index and the Alerian MLP Infrastructure Index since its inception.

Growth Trajectory: The next-generation infrastructure market is expected to experience significant growth in the coming years, driven by government initiatives and increasing demand for sustainable solutions.

Liquidity: NGEN has a moderate average trading volume and a tight bid-ask spread, indicating good liquidity.

Market Dynamics: Factors affecting NGEN's market environment include:

• Government Policies: Supportive policies for renewable energy and infrastructure development can boost the sector's growth.
• Technological Advancements: Innovations in areas like energy storage and electric vehicle technology can drive demand for next-generation infrastructure.
• Economic Conditions: A strong economy and low interest rates can support infrastructure investments.

Competitors: Key competitors include:

• iShares Global Clean Energy ETF (ICLN): 0.47% market share
• Invesco WilderHill Clean Energy ETF (PBW): 0.38% market share
• VanEck Merk 500 Environmental, Social and Governance ETF (ESGV): 0.25% market share

Expense Ratio: NGEN's expense ratio is 0.65%.

Investment Approach and Strategy:

• Strategy: Actively managed to track the Alerian US NextGen Infrastructure Index.
• Composition: Invests primarily in US-listed common stocks of companies involved in next-generation infrastructure sectors.

Key Points:

• Invests in a rapidly growing sector with significant potential.
• Actively managed for greater flexibility and potential outperformance.
• Experienced management team and strong track record.
• Moderate liquidity and competitive expense ratio.

Risks:

• Volatility: NGEN's focus on emerging sectors may lead to higher volatility than broader market ETFs.
• Market Risk: The underlying infrastructure assets are subject to market risks associated with the energy, technology, and sustainability sectors.

Who Should Consider Investing:

• Investors seeking exposure to the growth potential of next-generation infrastructure.
• Investors with a long-term investment horizon.
• Investors comfortable with higher volatility.

Fundamental Rating Based on AI:

8.5/10

NGEN receives a high rating based on its strong fundamentals. The ETF benefits from a unique and timely investment approach, experienced management, and a solid track record compared to its benchmark. Additionally, the favorable market dynamics and growth potential of the next-generation infrastructure sector provide further support for its positive outlook.

Resources:

• First Trust NGEN ETF website: https://www.ftportfolios.com/Solutions/ETFs/US-NextGen-Infrastructure-ETF-NGEN
• Alerian US NextGen Infrastructure Index: https://www.alerian.com/indices/us-nextgen-infrastructure-index/

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.