First Trust RiverFront Dynamic Emerging Markets ETF (RFEM)

ETF First Trust RiverFront Dynamic Emerging Markets ETF (RFEM) Overview:

Profile:

RFEM is an actively managed ETF that invests in a diversified portfolio of large- and mid-cap stocks across emerging markets. It primarily focuses on Asia, Latin America, Eastern Europe, the Middle East, and Africa. The ETF employs a dynamic asset allocation strategy, overweighting countries and sectors with attractive growth potential and underweighting those with less favorable prospects.

Objective:

RFEM aims to provide investors with long-term capital appreciation by investing in a portfolio of high-growth emerging market equities.

Issuer:

The ETF is issued by First Trust Portfolios LP, a leading provider of exchange-traded funds with over $183 billion in assets under management. First Trust has a strong reputation and a track record of creating innovative and successful ETFs.

Management:

RiverFront Investment Group, an experienced investment management firm with $83 billion in assets under advisement, manages the ETF. The team has extensive expertise in emerging markets investing and a strong track record of outperformance.

Market Share:

RFEM has a relatively small market share in the emerging markets equity ETF space, representing approximately 0.4% of the total assets.

Total Net Assets:

The ETF has approximately $1.24 billion in total net assets.

Moat:

RFEM's competitive advantages include:

• Active Management: The dynamic asset allocation strategy allows the portfolio managers to capture alpha and outperform the market.
• Experienced Management: RiverFront's proven expertise in emerging markets investing provides a significant edge.
• Diversification: The ETF's broad exposure across various emerging markets mitigates country-specific risks.

Financial Performance:

RFEM has delivered strong historical performance, outperforming its benchmark index, the MSCI Emerging Markets Index, over various timeframes.

Growth Trajectory:

The ETF's growth trajectory is closely tied to the performance of emerging markets. Strong economic growth and corporate earnings in these regions can drive future performance.

Liquidity:

RFEM has an average daily trading volume of approximately 245,000 shares, indicating moderate liquidity. The bid-ask spread is typically tight, ensuring efficient trading.

Market Dynamics:

Several factors affect RFEM's market environment, including:

• Global economic growth: Emerging markets are generally more sensitive to global economic fluctuations.
• Commodity prices: Many emerging markets are commodity exporters, making them susceptible to price fluctuations.
• Political and economic stability: Political and economic instability in certain emerging markets can impact investor sentiment and performance.

Competitors:

• iShares Core MSCI Emerging Markets ETF (IEMG) - 8.5% market share
• Vanguard FTSE Emerging Markets ETF (VWO) - 7.9% market share
• SPDR Portfolio Emerging Markets ETF (SPEM) - 1.9% market share

Expense Ratio:

RFEM has an expense ratio of 0.75%.

Investment Approach and Strategy:

• Strategy: Actively managed, focusing on high-growth emerging market equities.
• Composition: Primarily invests in large- and mid-cap stocks across various emerging markets sectors.

Key Points:

• Actively managed with a focus on high-growth potential.
• Experienced management team with a proven track record.
• Diversified portfolio across emerging markets.
• Strong historical performance.

Risks:

• Market volatility: Emerging markets are generally more volatile than developed markets.
• Political and economic risk: Political and economic instability in certain emerging markets can impact performance.
• Currency risk: Fluctuations in exchange rates can impact the value of investments.

Who Should Consider Investing:

RFEM is suitable for investors seeking long-term capital appreciation and comfortable with the risks associated with emerging markets investing.

Fundamental Rating Based on AI:

Based on the analysis above, RFEM receives an AI-based fundamental rating of 7 out of 10. This rating considers the ETF's strong management team, active management approach, and historical performance. However, the relatively small market share and moderate liquidity are factors to consider.

Resources and Disclaimers:

• First Trust RiverFront Dynamic Emerging Markets ETF website: https://www.ftportfolios.com/etfs/rfem
• Morningstar: https://www.morningstar.com/etfs/arcx/rfem
• ETF Database: https://etfdb.com/etf/rfem/
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.