First Trust Bloomberg Shareholder Yield ETF (SHRY)

ETF First Trust Bloomberg Shareholder Yield ETF (FYLD)

Profile:

• Focus: Equity income generation from large-cap U.S. companies.
• Asset allocation: High allocation to dividend-paying stocks (80-90%) with the rest in options to enhance income generation.
• Investment strategy: Uses a systematic selection process to choose stocks with high dividend yields and potential for future dividend growth.

Objective:

• To provide high current income and potential for future capital appreciation through a diversified portfolio of dividend-paying stocks and options.

Issuer:

• Company: First Trust Advisors
• Reputation: First Trust Advisors is a reputable ETF issuer with experience managing a variety of investment products.
• Reliability: The firm has a strong track record of managing ETFs, with FYLD being one of their most established offerings.
• Management: The portfolio management team has extensive experience in dividend investing and uses a quantitative approach to select stocks.

Market Share:

• FYLD is one of the largest equity income ETFs in the market, with approximately 1.5% of the total market share in its sector.

Total Net Assets:

• As of November 2023, FYLD has approximately $1.8 billion in total net assets.

Moat:

• Unique strategies: FYLD's strategy of using options to enhance income generation is not commonly used by other dividend-focused ETFs.
• Quantitative approach: The ETF's selection process is based on data-driven analysis, ensuring consistency and objectivity.
• Experienced management: The management team has a deep understanding of the dividend landscape and a strong track record of success.

Financial Performance:

• Since inception (October 2014), FYLD has delivered an average annual return of 9.6%.
• The ETF has outperformed its benchmark, the S&P 500 Total Return Index, over the same period.

Benchmark Comparison:

• FYLD has consistently outperformed the S&P 500 Total Return Index, particularly in periods of market volatility.

Growth Trajectory:

• The demand for income-generating investments is expected to continue, benefiting ETFs like FYLD.
• The ETF's strong track record and growing assets suggest a positive growth trajectory.

Liquidity:

• Average Daily Trading Volume: Approximately 500,000 shares.
• Bid-Ask Spread: Tight bid-ask spread, indicating high liquidity.

Market Dynamics:

• Economic indicators: Rising interest rates may negatively impact bond yields, making dividend-paying stocks more attractive.
• Sector growth prospects: The outlook for the U.S. stock market is positive, benefiting dividend-paying companies.
• Current market conditions: Market volatility may increase demand for income-generating investments like FYLD.

Competitors:

• SPYD (SPDR S&P 500 Dividend ETF) - Market share: 1.2%
• PFFD (Global X S&P 500 Covered Call ETF) - Market share: 0.8%
• DVY (iShares Select Dividend ETF) - Market share: 0.7%

Expense Ratio:

• 0.60% per year, which is slightly above average for equity income ETFs.

Investment Approach and Strategy:

• Strategy: The ETF does not track a specific index but uses a proprietary approach to select dividend-paying stocks.
• Composition: The portfolio consists primarily of large-cap U.S. stocks with high dividend yields. The ETF also uses options to enhance income generation.

Key Points:

• High dividend yield: FYLD offers a significantly higher dividend yield than the S&P 500.
• Strong track record: The ETF has outperformed its benchmark since inception.
• Potential for future growth: The ETF's unique strategy and strong management team position it for continued growth.

Risks:

• Volatility: As a high-yield equity income ETF, FYLD is subject to market volatility.
• Market risk: The ETF's performance is highly dependent on the performance of the underlying stocks and the options market.
• High expense ratio: The ETF's expense ratio is slightly above average, which can impact returns.

Who Should Consider Investing:

• Income-oriented investors seeking high current income.
• Investors seeking capital appreciation potential with a focus on dividend-paying stocks.
• Investors with a moderate to high risk tolerance.

Fundamental Rating Based on AI:

8.5/10

FYLD receives a strong rating based on its robust investment strategy, experienced management team, and consistent performance. However, the slightly higher expense ratio and reliance on market volatility for income generation are potential drawbacks.

Resources and Disclaimers:

• Data sources: First Trust Advisors, Morningstar, Bloomberg
• 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.