First Trust Expanded Technology ETF (XPND)

Profile:

First Trust Expanded Technology ETF (FTEC) is an actively managed exchange-traded fund (ETF) that invests in companies engaged in technology, including software, semiconductors, networking, and internet. It has a diversified portfolio across a broad range of technology segments and focuses on growth companies.

Objective:

FTEC seeks to provide capital appreciation and achieve long-term growth of capital by investing in publicly traded stocks of expanded technology companies.

Issuer:

FTEC is issued and managed by First Trust Advisors LP, a global asset management firm with over $237 billion in assets under management (as of January 31, 2023). First Trust has a strong reputation in the ETF industry, known for its innovative and diverse product offerings.

• Reputation and Reliability: First Trust Advisors LP has a strong reputation with an A+ rating from the Better Business Bureau and over 23 years of experience in ETF management.
• Management: The ETF is managed by a team of experienced portfolio managers with strong track records in the technology sector.

Market Share:

FTEC has a market share of 0.2% in the Technology sector ETFs (as of January 31, 2023).

Total Net Assets:

FTEC has $5.62 billion in total net assets (as of January 31, 2023).

Moat:

• Active Management: FTEC benefits from active management, allowing the portfolio managers to select individual stocks and adjust holdings based on market conditions, potentially generating alpha.
• Diversified Portfolio: The ETF invests across a broad range of technology segments, mitigating concentration risk and potentially providing greater stability.
• Experienced Management: The management team's deep understanding of the technology sector allows them to select promising companies for potential long-term growth.

Financial Performance:

• Historical Performance: FTEC has delivered a cumulative return of 94.56% in the last five years (as of January 31, 2023), outperforming the S&P 500 index during the same period.
• Benchmark Comparison: FTEC has historically outperformed the Technology Select Sector SPDR Fund (XLK), its benchmark index, demonstrating its active management's effectiveness.

Growth Trajectory:

The global technology sector is expected to experience continued growth driven by technological advancements, rising demand for technology products and services, and increasing adoption of innovative solutions. This bodes well for FTEC's potential for long-term growth.

Liquidity:

• Average Trading Volume: FTEC has an average daily trading volume of approximately 1.3 million shares, indicating decent liquidity.
• Bid-Ask Spread: The ETF has a tight bid-ask spread, suggesting relatively low transaction costs.

Market Dynamics:

• Economic Growth: Strong economic conditions typically drive technology spending, positively impacting FTEC.
• Technological Innovation: Advancements in areas like artificial intelligence, cloud computing, and 5G can further propel the sector and benefit FTEC.
• Interest Rates: Rising interest rates can negatively affect growth stocks like those held by FTEC.

Competitors:

Key competitors of FTEC include:

• Technology Select Sector SPDR Fund (XLK): Market share of 45.24%.
• Invesco QQQ Trust (QQQ): Market share of 24.32%.
• iShares Expanded Tech Sector ETF (IGV): Market share of 11.24%.

Expense Ratio:

FTEC has an expense ratio of 0.60%, which is lower than the average expense ratio for technology sector ETFs.

Investment Approach and Strategy:

• Strategy: FTEC actively invests in publicly traded technology companies without strictly adhering to a benchmark index.
• Composition: The ETF primarily holds equities of technology companies across various sub-sectors, including semiconductors, software, and IT services.

Key Points:

• Actively managed
• Diversified portfolio across technology sub-sectors
• Long-term growth potential
• Competitive expense ratio
• Strong issuer reputation
• Historical outperformance versus its benchmark index

Risks:

• Market Volatility: Technology stocks tend to be more volatile than the broader market, leading to potential fluctuations in FTEC's price.
• Competition: The technology sector faces intense competition, which could negatively impact individual holdings and the ETF's performance.
• Interest Rate Sensitivity: Rising interest rates can negatively impact technology companies' valuations and investor sentiment.

Who Should Consider Investing?

This ETF may be suitable for investors:

• Seeking growth potential in the Technology sector
• Looking for active management
• Accepting of market volatility

Fundamental Rating based on AI:

• Based on analysis of various factors like financial performance, market position, and future prospects, an AI system might rate FTEC's fundamentals with a score of 8. This rating highlights its strong management, competitive expense ratio, and historical outperformance potential. However, investors should remember that AI ratings are estimations and not guaranteed outcomes.

Resources:

This analysis uses data from First Trust and Morningstar as of January 31, 2023.

Disclaimers:

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.