First Trust RiverFront Dynamic Emerging Markets ETF (RFEM)

Overview

The First Trust RiverFront Dynamic Emerging Markets ETF (RFEM) aims to provide capital appreciation by investing in emerging market equities. It uses a dynamic allocation strategy based on RiverFront's proprietary methodology, focusing on countries with favorable economic conditions and growth prospects.

Reputation and Reliability

First Trust is a well-established ETF provider known for its innovative investment strategies and generally reliable product offerings.

Management Expertise

The management team at First Trust has experience in managing various ETF strategies, including those focused on emerging markets and dynamic asset allocation.

Goal

The ETF seeks capital appreciation primarily through investments in emerging market equity securities.

Investment Approach and Strategy

Strategy: RFEM employs a dynamic strategy based on economic indicators, relative strength, and valuation considerations to actively select and allocate assets within emerging markets.

Composition The ETF primarily holds equity securities of companies located in emerging market countries. The allocation is dynamically adjusted based on the investment strategy.

Market Share: RFEM holds a small portion of the total emerging markets ETF market.

Total Net Assets (AUM): 72730710

Key Competitors

• iShares Core MSCI Emerging Markets ETF (IEMG)
• Vanguard FTSE Emerging Markets ETF (VWO)
• Schwab Emerging Markets Equity ETF (SCHE)

Competitive Landscape

The emerging markets ETF space is dominated by large, passively managed funds like IEMG and VWO. RFEM's dynamic strategy offers a potential advantage in volatile markets, but its higher expense ratio and smaller AUM may be disadvantages compared to its competitors.

Historical Performance: Historical performance data needs to be sourced. Please refer to financial data providers for specific returns over various time periods.

Benchmark Comparison: The ETF's performance should be compared to a broad emerging markets index such as the MSCI Emerging Markets Index. Refer to financial data providers for specific performance comparisons.

Expense Ratio: 0.85

Average Trading Volume

The ETF's average trading volume reflects moderate liquidity for institutional investors, but can be thin for retail investors.

Bid-Ask Spread

The bid-ask spread is typically reasonable, but may widen during periods of market volatility.

Market Environment Factors

Emerging market growth rates, currency fluctuations, trade policies, and geopolitical events significantly impact RFEM's performance.

Growth Trajectory

RFEM's growth is tied to the overall performance and investment flows into emerging markets, as well as the success of its dynamic allocation strategy.

Competitive Edge

RFEM's dynamic asset allocation strategy, developed by RiverFront, distinguishes it from passively managed emerging market ETFs. This active approach potentially allows it to outperform during periods of market volatility or when specific emerging markets are outperforming others. However, the success of this strategy depends on the effectiveness of RiverFront's methodology and its ability to correctly identify favorable investment opportunities. The higher expense ratio is the tradeoff for this active management.

Volatility

RFEM's volatility is expected to be high given its focus on emerging markets and the dynamic nature of its investment strategy.

Market Risk

Emerging market equities are subject to currency risk, political risk, regulatory changes, and economic instability, which can all negatively impact RFEM's performance.

Ideal Investor Profile

RFEM is suitable for investors seeking exposure to emerging markets with a preference for active management and a willingness to accept higher risk and potentially higher returns.

Market Risk

RFEM is best suited for long-term investors with a higher risk tolerance who are comfortable with the potential volatility of emerging markets and seeking active management.

First Trust RiverFront Dynamic Emerging Markets ETF is an actively managed ETF that invests in emerging market equities, using a dynamic strategy to adjust asset allocation based on economic indicators. It provides exposure to emerging markets with the potential for outperformance through active management, but it also carries a higher expense ratio and increased volatility compared to passive ETFs. The fund is suitable for risk-tolerant investors seeking long-term growth in emerging markets through a dynamic investment approach, with RiverFront's active management providing an edge over traditional passive ETFs. However, it's smaller AUM may affect liquidity, which could impact the returns for investors.

• IEMG
• VWO
• SCHE
• EEM
• SPEM

Data Sources:

• First Trust website
• ETF.com
• Morningstar

Disclaimers:

This analysis is for informational purposes only and does not constitute investment advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor. Past performance is not indicative of future results. Market share data is approximate and based on available information.