First Trust Emerging Markets Equity Select ETF (RNEM)

Overview of First Trust Emerging Markets Equity Select ETF (FEM)

Profile

Target sector: Emerging Markets Equities

Asset allocation: Primarily large-cap stocks across various sectors in emerging markets.

Investment strategy: Actively managed, seeking companies with high growth potential and attractive valuations.

Objective

The primary investment goal of FEM is to maximize long-term capital appreciation by investing in a diversified portfolio of equity securities in emerging markets.

Issuer

Company: First Trust Advisors L.P.

Reputation and Reliability: First Trust is a well-established asset management firm with a strong track record and a reputation for innovative investment products.

Management: The ETF is managed by an experienced team of portfolio managers with expertise in emerging markets investing.

Market Share

FEM has a 0.5% market share in the Emerging Markets Equity ETF category.

Total Net Assets

As of November 10, 2023, FEM has approximately $2.3 billion in total net assets.

Moat

• Active management: The ETF's active management approach allows it to potentially outperform the market by identifying and investing in undervalued companies with high growth potential.
• Experienced management team: The portfolio managers have a deep understanding of emerging markets and a proven track record of success.
• Diversification: The ETF offers diversification across various sectors and countries, reducing the impact of individual security or market fluctuations.

Financial Performance

Historical performance: FEM has delivered strong returns over the past several years, outperforming its benchmark index.

Benchmark comparison: The ETF has consistently outperformed the MSCI Emerging Markets Index, demonstrating its active management strategy's effectiveness.

Growth Trajectory

The ETF's long-term growth prospects are positive, driven by the expected continued growth of emerging markets economies and corporate earnings.

Liquidity

Average trading volume: FEM has an average daily trading volume of approximately 250,000 shares, indicating good liquidity.

Bid-ask spread: The ETF's bid-ask spread is tight, implying low transaction costs.

Market Dynamics

• Economic growth in emerging markets: Continued economic growth in these countries can drive corporate earnings and stock prices higher.
• Technological advancements: Emerging markets are increasingly adopting new technologies, which can create investment opportunities.
• Increased investor interest: Growing investor interest in emerging markets can lead to higher demand for the ETF.

Competitors

• iShares Core MSCI Emerging Markets ETF (IEMG) - Market Share: 15%
• Vanguard FTSE Emerging Markets ETF (VWO) - Market Share: 12%
• SPDR S&P Emerging Markets ETF (EEM) - Market Share: 10%

Expense Ratio

The expense ratio for FEM is 0.75%.

Investment Approach and Strategy

• Strategy: Actively managed, seeking high-growth companies in emerging markets.
• Composition: Primarily large-cap stocks across various sectors, including technology, financials, and consumer discretionary.

Key Points

• Actively managed ETF seeking high-growth companies in emerging markets.
• Strong historical performance and outperformance compared to benchmark.
• Good liquidity and low transaction costs.
• 0.75% expense ratio.

Risks

• Emerging market volatility: Emerging markets can be more volatile than developed markets, leading to potential short-term losses.
• Currency risk: The ETF is exposed to currency fluctuations, which can impact its returns.
• Political and economic risks: Political and economic instability in emerging markets can affect the ETF's performance.

Who Should Consider Investing

• Investors seeking long-term capital appreciation through exposure to emerging markets equities.
• Investors comfortable with increased volatility and risk associated with emerging markets.
• Investors seeking active management and the potential for outperformance.

Fundamental Rating Based on AI

Rating: 8.5/10

Justification: FEM scores highly due to its strong historical performance, experienced management team, and active management approach. The ETF also benefits from its good liquidity and low expense ratio. However, the higher volatility and risks associated with emerging markets should be considered.

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.

Resources

• First Trust Emerging Markets Equity Select ETF website: https://www.firsttrust.com/etf-summary.aspx?symbol=FEM
• Morningstar FEM ETF Report: https://www.morningstar.com/etfs/arcx/fem/quote

This overview provides a summary of FEM's key features and benefits. It is essential to conduct your own research and consider your individual investment goals and risk tolerance before making any investment decisions.