Weakness in First Trust RiverFront Dynamic Eurp ETF's People and Process Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 A recent bout of personnel turnover and other weaknesses drive the strategy's Low People Pillar. The strategy earns a Below Average Process Pillar rating.  High quality exposure is attributed to stocks with low financial leverage and strong returns on equity. And a low liquidity exposure is rooted in stocks with lower trading volumes, limiting managers' flexibility. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

ASML Hld

National Energy Services Reunited

Moelis

Novan

TotalEnergies SE

Shell PLC

Rogers

Autoliv

GlaxoSmithKline

Banco Bilbao Vizcaya Argentaria

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 RiverFront Dynamic Eurp ETF earns a Below Average Process Pillar rating. 

The process benefits from the experience of the management team, which averages 23 years at this fund. However, the rating is weakened by the fund's mediocre long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period. The parent firm's five-year risk-adjusted success ratio of 29% also holds the process back. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

 This strategy does not differentiate itself from its Europe Stock category peers in terms of size and style exposure. Looking at additional factor exposure, this strategy has consistently had a defensive tilt owing to its exposure to high-quality stocks over the past few years. Such holdings could cause it to trail peers during economic booms, but help it better withstand busts. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. This strategy also has held illiquid stocks, evidenced by holdings' lower trading volume in recent years over peers, resulting in high liquidity risk exposure. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. Similarly, in recent months, the strategy also had less exposure to the Liquidity factor than peers. In addition, this strategy has taken on exposure to high-momentum stocks in these years. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. In this month, the strategy also had more exposure to the Momentum factor over 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 healthcare and energy relative to the category average by 4.5 and 3.5 percentage points, respectively. The sectors with low exposure compared to category peers are industrials and basic materials, underweight the average by 3.6 and 3.1 percentage points of assets, respectively. The portfolio is composed of 112 holdings and is relatively top-heavy. Of the strategy's assets, 29.6% are concentrated within the top 10 holdings, as opposed to the typical peer's 21.8%. And finally, in terms of portfolio turnover, on a year-over-year basis, 68% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Below Average

Process

First Trust RiverFront Dynamic Eurp ETF earns a Low People Pillar rating. The most important factor affecting the rating is the parent firm's five-year success ratio of 39%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. The instability of its management team also detracts from the team. The fund last saw a manager change two months ago. The parent firm's five-year retention rate of 67% detracts from the rating further.


Chris Konstantinos, the longest-tenured manager on the strategy, provides strong guidance, offering 23 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.3 stars, indicating that their risk-adjusted returns have underperformed the category average. Despite having a small team, the two listed managers boast 23 years of listed portfolio management experience. The highest personal investment by either manager is less than $10,000. That is too low to promote alignment of their interests with the fund's investors.

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.

Average

Parent

First Trust RiverFront Dynamic Europe ETF

RFEU is an actively-managed fund that seeks capital appreciation from developed European stocks selected using a factor approach. The manager has discretion to currency-hedge up to 100% of the portfolio.

JPMorgan BetaBuilders Europe ETF

Xtrackers MSCI Europe Hedged Equity ETF

Xtrackers MSCI Eurozone Hedged Equity ETF

WisdomTree Europe SmallCap Dividend Fund

WisdomTree Europe Quality Dividend Growth Fund

ProShares MSCI Europe Dividend Growers ETF

Direxion Daily FTSE Europe Bull 3X Shares

WisdomTree Europe Hedged SmallCap Equity Fund

iShares MSCI Eurozone ETF

First Trust STOXX European Select Dividend Index Fund

First Trust Europe AlphaDEX Fund

First Trust Eurozone AlphaDEX ETF

SPDR EURO STOXX 50 ETF

Franklin FTSE Europe ETF

Franklin FTSE Eurozone ETF

First Trust IPOX Europe Equity Opportunities ETF

Goldman Sachs ActiveBeta Europe Equity ETF

WisdomTree Europe Hedged Equity Fund

iShares Currency Hedged MSCI Eurozone ETF

iShares Core MSCI Europe ETF

iShares MSCI Europe Small-Cap ETF

iShares Europe ETF

ALPS O'Shares Europe Quality Dividend ETF Shares

Pacer Trendpilot European Index ETF

SPDR Portfolio Europe ETF

Vanguard FTSE Europe ETF

Eurozone business activity remained in contraction at the end of the third quarter of the year, as an increased rate of loss of orders led to a further decline in activity. The overall reduction in output was again led by manufacturing, but the service sector saw activity decrease for the second month running.

Eurozone Flash PMI Fuels Further Downturn Worries As Demand Weakness Intensifies

The ECB just announced its tenth consecutive policy rate hike since July last year, hiking all interest rates by 25bp. Higher inflation and inflation forecasts look like the main drivers of the hike.

ECB Announces Final Rate Hike

ProShares UltraShort Euro

Invesco CurrencyShares Euro Trust

ProShares Ultra Euro

Markets are torn. Will the ECB hike this week or not?

ECB Cheat Sheet: Is A Hike Hawkish Enough?

Xtrackers MSCI EAFE Hedged Equity ETF

These Europe ETFs offer dividend yields higher than the benchmark U.S. treasury yields.

Looking to Tap Europe ETFs? 4 Picks to Earn Juicy Yield

Inflation in the eurozone did not fall in August, which could tip the ECB in favour of a final 25bp hike at the governing council meeting in two weeks' time. Still, overall inflation dynamics remain relatively benign, and we still expect inflation to trend much lower at the end of the year.

Eurozone Inflation Stagnates Ahead Of ECB September Meeting

Eurozone business activity contracted at an accelerating pace in August, according to the latest flash PMI survey data. The overall rate of input cost inflation and selling prices remained indicative of consumer price inflation running at an annual rate of 3% in the coming months.

Eurozone Downturn Deepens According To Flash PMI But Inflation Pressures Tick Higher

Another weak PMI for the eurozone confirms a sluggish economy with recession as a downside risk. Inflation pressures for services remain stubborn as wage pressures continue to be a concern.

Eurozone PMI Paints Worrisome Growth Picture

iShares MSCI Europe Financials ETF

As the ECB has been putting increasing emphasis on the recent readings of underlying inflation, it is more important to look at the short-term dynamics than at the year-on-year figures. While some easing of inflationary tensions is indeed observable, it would be premature to exclude another rate hike.

The 'Real' Dynamics Of Core Inflation In The Eurozone

Franklin FTSE Europe Hedged ETF

The CPI for services spiked by 5.6% in July, compared to a year ago, up from 5.4% in June and 5.0% in May, another record in the data going back to 1997, according to Eurostat today. “Core” CPI (without food and energy products that consumers buy) remained at 5.5% in July, same as in June, and up from 5.3% in May.

Runaway Services Inflation In Euro Area Spikes To Record. Core CPI Stays Near Record

Global X DAX Germany ETF

Xtrackers MSCI Germany Hedged Equity ETF

WisdomTree Germany Hedged Equity Fund

iShares MSCI Germany ETF

iShares MSCI Germany Small Cap ETF

iShares MSCI France ETF

First Trust Germany AlphaDEX Fund

Franklin FTSE France ETF

Franklin FTSE Germany ETF

iShares Currency Hedged MSCI Germany ETF

The seasonally adjusted HCOB Flash Eurozone Composite PMI Output Index, based on approximately 85% of usual survey responses, dropped from 49.9 in June to 48.9 in July, its lowest since last November. The dearth of new orders meant backlogs of work fell at an increased rate as companies often relied on previously placed orders to support current operating levels.

Eurozone Flash PMI Signals Cooling Inflation Amid Rising Recession Risks

Higher interest rates soon would prevent more economic pain later. The European Central Bank could prevent inflation expectations from becoming unmoored and drifting upwards by continuing to raise its policy rate.

Europe Should Tighten Monetary Policy Further

The European Central Bank looks set to hike rates by 25bp on Thursday. With the bleak economic outlook and disinflation gaining traction, however, the end to rate hikes is near.

ECB Preview: The Final Countdown

The latest data show that eurozone growth is not picking up, with services now also losing steam. While it's not all downhill from here, subdued growth is the best we can hope for.

A Languishing Eurozone Economy

Industrial production growth in Europe has more or less stagnated since late 2020 as the speedy recovery that followed the first round of lockdowns came to a halt. At the same time, the sector is in an incredible state of flux; structural changes around energy and trade are providing substantial challenges for businesses.

Europe's Industry Outlook: We're Still Riding The Energy And Pandemic Shockwaves

Rising corporate profits account for almost half the increase in Europe's inflation over the past two years, as companies increased prices by more than spiking costs of imported energy. Europe's businesses have so far been shielded more than workers from the adverse cost shock.

Europe's Inflation Outlook Depends On How Corporate Profits Absorb Wage Gains

Eurozone business output growth came close to stalling in June, according to the latest HCOB flash PMI survey data produced by S&P Global, pointing to renewed weakness in the economy after the brief growth revival recorded in the spring. Backlogs of work fell at the steepest rate for seven months, reflecting the sustained (albeit moderating) output growth at a time of falling inflows of new work.

Eurozone Flash PMI Shows Inflation Pressures Cooling In June As Economic Upturn Fades

The European Central Bank raised its key rate by 25 basis points as expected, but startled investors with its outlook. The European Central Bank decisions last week were in line with market expectations.

Surprisingly Hawkish ECB Forecasts Challenge Market

UBS AG FI Enhanced Europe 50 ETN

The European Central Bank President, Christine Lagarde, is keeping the door wide open for more interest rate rises this summer. Lagarde has been explaining her decision to raise eurozone rates again by 25 basis points today.

Lagarde Pre-Announces Another ECB Rate Hike For July

iShares MSCI Netherlands ETF

iShares MSCI Spain ETF

iShares MSCI United Kingdom ETF

iShares MSCI United Kingdom Small Cap ETF

First Trust United Kingdom AlphaDEX Fund

Franklin FTSE United Kingdom ETF

iShares Currency Hedged MSCI United Kingdom ETF

For the first time in over a decade, labor unions have leverage - and fully intend to take advantage of it. Despite historically outsized wage settlements, real wages remain negative and are unlikely to be positive for some time.

Europe's Unionized Wage Pressures

UBS will receive substantial downside protection on acquired CS non-core assets of up to CHF25 billion. Credit Suisse remains active and should continue meeting its obligations until the merger closes, likely in the second quarter of 2023.

European Banks After Credit Suisse

HICP inflation fell for the fourth straight month in February. Energy inflation will plunge again in March.

Underlying Price Pressures To Extend ECB Rate-Hiking Cycle

Lower energy prices have boosted both business and consumer confidence. However, the better growth outlook will slow the decline in core inflation, pushing the ECB to act more forcefully.

Eurozone: Better Than Expected Doesn't Mean Good

Fully stocked warehouses, the higher cost of working capital and a gradual return of just-in-time management will likely weigh on inventory building in the coming months. That will be a modest headwind for economic growth in Europe in the first half of the year.

Inventory Overhang Will Be A Modest Headwind For Eurozone Growth

Overnight interest rates measure the cost at which market participants access short-term funding and are thus critical to the health of a given financial system. CME Group RepoFunds Rates and the European Central Bank's €STR are both important overnight interest rates for the eurozone.

4 Key Questions On European Overnight Rates

Economists expected the U.S. economy to have added 185,000 jobs last month, following the 223,000 added in December. Forecasts also had the unemployment rate increase from 3.5% to 3.6%.

News for First Trust RiverFront Dynamic Europe ETF ETF (RFEU)