First Trust Indxx Glbl Natrl Res Inc ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy’s management team earns an Average People Pillar rating. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable overweight position in yield exposure and quality exposure compared with category peers. High yield exposure is attributed to holding high dividend-paying or buyback stocks, and is suitable for income seekers outside of fixed-income. And a high quality exposure is rooted in holding stocks that are consistently profitable, growing, and have solid balance sheets. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Woodside Energy Group Ltd

Agnico Eagle Mines

Archer-Daniels-Midland Company

Nutrien

Tyson Foods

CF Industries Holdings

Pentair

Southern Copper

Chesapeake Energy

MFS Intermediate Income Trust

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. First Trust Indxx Glbl Natrl Res Inc ETF earns an Average Process Pillar rating. 

The leading factor in the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The stability of the management team also supports the process. Specifically, the fund has not seen a manager change in the last 11 years. Lastly, the process is limited by the fund's unimpressive long-term risk-adjusted performance. This can be seen in its 10-year alpha calculated relative to the category average, which suggests that the process has struggled over that period.

 This strategy leans toward larger, more undervalued companies than its average peer in the Natural Resources Morningstar Category. Looking at additional factor exposure, the managers have consistently overweighted yield-paying companies compared with Morningstar Category peers in recent years, shown by the portfolio's high exposure to stocks paying dividends or buying back shares. High-yield stocks tend to be associated with more mature, profitable businesses that can grow as well as provide a stream of income. Such stocks could suffer, however, if setbacks force them to cut their dividends. In recent months, the strategy was more exposed to the Yield factor compared with its Morningstar Category peers as well. This strategy also has tilted in favor of high-quality stocks, those that have demonstrated low financial leverage and solid return on equity, during these years. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. In addition, this strategy has an underweight bias to the volatility factor, meaning investing in stocks that have a lower standard deviation of returns. These companies have historically been a valuable ballast to steady portfolio returns during market downturns. In recent months, the strategy also had less Volatility factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in energy and consumer defensive relative to the category average by 11.8 and 9.1 percentage points, respectively. The sectors with low exposure compared to category peers are basic materials and industrials, underweight the average by 6.1 and 5.5 percentage points of assets, respectively. The portfolio is positioned across 56 holdings and is relatively concentrated. In particular, 56.7% of the fund’s assets are housed within the top 10 holdings, as opposed to the category’s 25.3% average. And finally, in terms of portfolio turnover, looking at year-over-year movements, 82% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

First Trust’s equity team is valuable but does not stand out as one of the industry's best, warranting an Average People Pillar rating. There’s a sizable bench of seven managers listed on the fund. Experience on the team is abundant, with 22 years of average portfolio management experience. Together, they manage a total of 108 strategies, with solid long-term prospects. The strategies average a Bronze asset-weighted Morningstar Medalist Rating, indicating a position to deliver positive alpha relative to the category median in aggregate. This group has had relatively low management turnover, providing a stable environment and continuity for the strategies. 

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

People

First Trust meets the industry standard for stewardship, but it could do more to align itself with investors. It earns an Average Parent rating.

This is a team-oriented organization that eschews star managers. While exchange-traded funds represent the bulk of the firm's assets, First Trust bypasses the competitive market for low-cost beta funds, instead opting for complex strategies with higher management fees. However, the firm's focus on ETFs for future product development underpins its commitment to tax efficiency and transparency. Some of its thematic strategies appear trendy, but it stands behind them and rarely liquidates funds. 

The firm is a private partnership, controlled by Jim Bowen, the CEO. Many senior managers are limited partners. This ownership structure helps the firm stay focused on the long term and promotes retention, which has been strong for the investment team. The firm has grown considerably over the past decade and is among the largest providers of actively managed ETFs, as well as unit investment trusts. As it has grown, the firm has expanded its investment team and beefed up its technology infrastructure.

First Trust's focus is on educating advisors and providing them solutions. This may benefit investors indirectly, but First Trust could do more to directly align with investors by cutting fees and limiting trendy strategies.

Parent

First Trust Indxx Global Natural Resources Income ETF

FTRI tracks an index of natural resource stocks selected by dividend yield and weighted by market cap.

First Trust Indxx Global Natural Resources Income ETF provides exposure to companies in the upstream segment of the natural resources sector. The FTRI ETF holds 48 stocks in various industries within the natural resources realm, with a focus on high-yielding companies. Investing in natural resources can act as an inflation hedge, benefit from emerging market growth, and enhance portfolio diversification.

FTRI: A Potential Inflation Hedge To Consider

First Trust Indxx Global Natural Resources Income ETF focuses on high dividend-yielding natural resources producing companies in various categories. Investing in natural resources can act as an inflation hedge and provide superior risk-adjusted returns compared to other inflation hedges. Global natural resource producers can benefit from the growth in emerging economies, but there are risks such as commodity volatility and natural disasters.

FTRI: Great Dividends From An Unusual Source, A Natural Resources ETF

First Trust Indxx Global Natural Resources Income ETF features a 6% yield and has almost 80% of its asset value in energy and materials. About 43% of asset value is in the U.S. and Canada, and about 65% is in developed countries. FTRI offers global exposure to commodities without the risk of decay due to roll yields in futures-based ETFs. However, it is quite volatile.

FTRI: 6% Yield And Exposure To Commodities Without Contango

FTRI offers exposure to the top 50 dividend yield stocks across natural resource producers. The fund yields 8.4% through a quarterly payout. We are bullish on commodities and see room for FTRI to rally higher.

FTRI: Compelling Value In High-Yield Natural Resources Stocks With An 8% Yield

BHP Billiton

Coterra Energy

Ecopetrol

First Trust DJ Global Select Dividend Index Fund

Schwab Fundamental International Large Co. Index ETF

Fortescue Metals Group Limited

Xt EAFE Div Yld Shs

Petroleo Brasileiro

Invesco FTSE RAFI Developed Markets ex-U.S. ETF

Rio Tinto plc Sponsored

Suncor Energy

Vale S.A.

SPDR S&P Global Dividend ETF

Materials Select Sector SPDR Fund

Energy Select Sector SPDR Fund

First Trust Indxx Global Natural Resources Income ETF holds 50 global stocks, mostly in materials and energy. The portfolio is quite concentrated in a few countries, industries and holdings. This fund may profit by inflation.

FTRI: ETF With 8% Yield To Bet On Commodities

The First Trust Global Natural Resources ETF invests in 50 global natural resource companies to deliver strong income for investors. The fund pays quarterly dividends, has an attractive TTM yield of 7.88%, and has an expense ratio of 0.70%.

FTRI: A Global Natural Resource Income ETF Yielding 7.88%

Inflation has risen all year, and remains elevated. FTRI provides investors with a simple, moderately effective way to hedge against rising inflation and yields 9.9%.

FTRI: Global Commodities Equity Income ETF, Effective Inflation Hedge, Strong 9.9% Dividend Yield

FTRI invests in global companies involved in natural resources extraction and transformation. Over 40% of asset value is in the U.S. and Brazil.

FTRI: A 9% Yield ETF Designed To Fight Inflation

SPDR S&P Global Natural Resources ETF

FlexShares Morningstar Global Upstream Natural Resources Index Fund

VanEck Vectors Natural Resource ETF

They're all outperforming broad equity markets year to date.

4 Global ETFs Offer Natural Resources Exposure

Air Products and Chemicals

BlackRock Resources & Commodities Strategy Trust

Fidelity MSCI Materials Index ETF

Franco-Nevada C

First Trust Materials AlphaDEX Fund

IQ Global Resources ETF

Horizon Kinetics Inflation Beneficiaries ETF

iShares U.S. Basic Materials ETF

John Hancock Multifactor Materials ETF

iShares Global Materials ETF

Adams Natural Resources Fund Inc

Invesco S&P 500 Equal Weight Materials ETF

PSh Shr Bsc Mat Shs

ProShares UltraShort Basic Materials

ProShares Ultra Basic Materials

Vanguard Materials ETF

The basic materials sector is relatively small when you only consider dividend-paying companies. The basic materials sector is best for growth investors. APD has found an interesting way to position its business in a sector where most are stuck with commodity price fluctuations.

Basic Materials: One Of The Best Sectors To Play

VanEck Vectors Unconventional Oil & Gas ETF

iShares U.S. Oil & Gas Exploration & Production ETF

John Hancock Multifactor Energy ETF

Invesco Dynamic Energy Exploration & Production ETF

SPDR S&P Oil & Gas Exploration & Production ETF

The energy space has warmed up to solid deal activities with the U.s. shale industry announcing back-to-back merger deals.

Shale Mergers Strengthening: ETFs to Benefit

News for First Trust Indxx Global Natural Resources Income ETF ETF (FTRI)