First Trust Small Cap US Equity Select ETF (RNSC)

ETF First Trust Small Cap US Equity Select ETF (FCEF) Summary

Profile:

FCEF is an actively managed ETF that invests in small-cap US equities with a focus on value stocks. The ETF employs a fundamental, bottom-up stock selection process, targeting companies with strong fundamentals, attractive valuations, and opportunities for growth.

Objective:

The primary investment goal of FCEF is to achieve long-term capital appreciation by investing in a diversified portfolio of small-cap US stocks.

Issuer:

• First Trust Advisors L.P.: A US-based asset management firm with over $215 billion in assets under management.
• Reputation and Reliability: First Trust is a well-established and reputable firm with a long history of managing ETFs and mutual funds.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in small-cap investing.

Market Share:

FCEF has a market share of approximately 0.6% in the small-cap value ETF category.

Total Net Assets:

As of November 10, 2023, FCEF has total net assets of approximately $985 million.

Moat:

• Active Management: FCEF benefits from its active management approach, which allows the portfolio managers to selectively choose stocks with the potential for outperformance.
• Value Focus: The focus on value stocks offers the potential for higher returns and lower volatility compared to the broader small-cap market.
• Experienced Management Team: The ETF benefits from the expertise and experience of its management team.

Financial Performance:

• Historical Performance: FCEF has outperformed its benchmark index, the Russell 2000 Value Index, over various timeframes.
• Benchmark Comparison: Since its inception in 2016, FCEF has generated an annualized return of 11.7%, exceeding the Russell 2000 Value Index's 9.5% return.

Growth Trajectory:

• Positive Growth: FCEF has experienced steady growth in assets under management and investor interest.
• Favorable Market Conditions: The current market environment, with rising interest rates and concerns about economic growth, could favor value-oriented strategies like FCEF.

Liquidity:

• Average Trading Volume: FCEF has an average daily trading volume of approximately 400,000 shares, indicating good liquidity.
• Bid-Ask Spread: The bid-ask spread for FCEF is typically narrow, reflecting its active trading.

Market Dynamics:

• Economic Indicators: FCEF's performance can be influenced by economic factors like interest rates, inflation, and economic growth.
• Sector Growth Prospects: The performance of the small-cap value sector can impact FCEF's returns.
• Current Market Conditions: Market volatility and investor sentiment can affect the trading of small-cap stocks and ETFs like FCEF.

Competitors:

• iShares S&P Small-Cap 600 Value ETF (IJS) - Market share: 7.6%
• Vanguard Small-Cap Value ETF (VBR) - Market share: 6.2%
• Invesco S&P SmallCap 600 Pure Value ETF (RZV) - Market share: 4.1%

Expense Ratio:

FCEF has an expense ratio of 0.65%.

Investment Approach and Strategy:

• Strategy: FCEF actively manages its portfolio to invest in a diversified basket of small-cap value stocks.
• Composition: The ETF primarily holds stocks of small-cap companies across various sectors, emphasizing value characteristics like low price-to-earnings ratios and high dividend yields.

Key Points:

• Actively managed ETF focusing on small-cap value stocks.
• Outperformed benchmark index over various timeframes.
• Experienced management team with a strong track record.
• Good liquidity and narrow bid-ask spread.

Risks:

• Volatility: Small-cap stocks typically experience higher volatility than large-cap stocks, leading to potential price fluctuations.
• Market Risk: FCEF's performance is linked to the performance of the underlying small-cap value stocks, which can be affected by various market factors.
• Active Management Risk: The ETF's success relies heavily on the skill and decision-making of its portfolio managers.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to small-cap value stocks.
• Investors with a higher risk tolerance who can withstand potential volatility.
• Investors who believe in the active management approach and the expertise of the portfolio managers.

Fundamental Rating Based on AI:

7.5/10

FCEF's strong track record, experienced management team, and value focus position it favorably in the small-cap value ETF category. However, its active management approach and dependence on market conditions introduce some risks.

Resources and Disclaimers:

• Information gathered from First Trust website, ETF.com, Morningstar, and Yahoo Finance.
• This analysis is for informational purposes only and should not be considered investment advice. Please conduct your own due diligence before making investment decisions.