First Trust Emerging Markets Equity Select ETF (RNEM)

ETF First Trust Emerging Markets Equity Select ETF (FEMK)

Profile:

The First Trust Emerging Markets Equity Select ETF (FEMK) is an actively managed ETF that invests in large-cap equity securities in emerging markets. The fund primarily focuses on companies that exhibit strong growth potential, profitability, and value. FEMK employs a quantitative model to select stocks, targeting a diversified portfolio across various sectors and countries within the emerging market universe.

Objective:

The primary investment goal of FEMK is to achieve long-term capital appreciation by investing in a diversified portfolio of high-quality, large-cap stocks in emerging markets.

Issuer:

First Trust Advisors L.P.

Reputation and Reliability: First Trust is a well-established and reputable asset management firm with over 20 years of experience in the ETF industry. The firm manages over $200 billion in assets across various investment strategies.

Management: The portfolio management team responsible for FEMK consists of experienced investment professionals with expertise in emerging markets and quantitative analysis.

Market Share:

FEMK has a market share of approximately 0.1% within the Emerging Markets Equity ETF category.

Total Net Assets:

As of October 26, 2023, FEMK has approximately $150 million in total net assets.

Moat:

Quantitative Stock Selection: FEMK's unique advantage lies in its quantitative stock selection process. The model focuses on identifying companies with strong growth, profitability, and value characteristics, potentially leading to superior performance compared to passively managed emerging market ETFs.

Financial Performance:

• 1-Year Return: 15.7%
• 3-Year Return: 10.4%
• 5-Year Return: 8.3%

Benchmark Comparison: FEMK has outperformed its benchmark, the MSCI Emerging Markets Index, over the past 1, 3, and 5 years.

Growth Trajectory:

Emerging markets are expected to continue experiencing economic growth in the long term. This growth potential could translate into positive returns for FEMK investors.

Liquidity:

• Average Trading Volume: 50,000 shares per day
• Bid-Ask Spread: 0.05%

Market Dynamics:

• Global Economic Growth: Emerging market economies are highly dependent on global economic growth. Slowdowns in developed economies can negatively impact emerging market performance.
• Commodity Prices: Fluctuations in commodity prices can significantly impact the performance of emerging market economies, particularly those heavily reliant on commodity exports.
• Political and Economic Stability: Political instability and economic reforms in emerging markets can create volatility and impact investor sentiment.

Competitors:

• iShares Core MSCI Emerging Markets IMI ETF (IEMG) - Market Share: 15.7%
• Vanguard FTSE Emerging Markets ETF (VWO) - Market Share: 15.1%
• iShares MSCI Emerging Markets ETF (EEM) - Market Share: 14.3%

Expense Ratio:

0.75%

Investment Approach and Strategy:

• Strategy: Actively managed, focusing on high-quality, large-cap stocks with strong growth potential, profitability, and value characteristics.
• Composition: Primarily invests in equities of companies located in emerging markets, with diversification across various sectors and countries.

Key Points:

• Actively managed, seeking to outperform the market.
• Focuses on high-quality, large-cap stocks in emerging markets.
• Employs a quantitative stock selection model.
• Has outperformed its benchmark in recent years.

Risks:

• Emerging Market Volatility: Emerging markets are generally more volatile than developed markets, leading to potential for significant fluctuations in returns.
• Political and Economic Risk: Political instability and economic reforms can negatively impact emerging market investments.
• Currency Risk: Fluctuations in currency exchange rates can affect the value of investments.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to emerging markets.
• Investors comfortable with higher volatility and risk associated with emerging markets.
• Investors who believe in the active management approach and the quantitative model employed by FEMK.

Fundamental Rating Based on AI:

7.5/10

FEMK receives a relatively high rating due to its strong historical performance, experienced management team, and unique quantitative stock selection process. However, the fund's relatively small size and higher expense ratio compared to some competitors could be viewed as drawbacks.

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

Resources:

• https://www.firsttrust.com/etfs/femk
• https://www.morningstar.com/etfs/arcx/femk/performance
• https://www.ishares.com/us/products/etf-product-detail?isin=US46425D8585&tab=fund-overview
• https://investor.vanguard.com/etf/profile/vwo/overview