The combination of an Average People Pillar rating and a Below Average Process Pillar rating limit  FT Raymond James Multcp Gr Eq ETF to a Morningstar Medalist Rating of Neutral.  The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy receives a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in liquidity exposure and an underweight in momentum exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. The strategy’s management team earns an Average People Pillar rating. 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

Alphabet

Natera

Chipotle

Spotify

Boston Scientific

Apple

Welltower

Motorola Solutions

Tradeweb Markets

Toll Brothers

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. FT Raymond James Multcp Gr Eq ETF earns a Below Average Process Pillar rating. 

The process benefits from the experience of the management team, which averages 22 years at this fund. However, the rating is held back by the parent firm's five-year risk-adjusted success ratio of 29%. 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 subpar success ratio suggests that the firm could do better across its fund lineup. The parent firm's disappointing risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.7 stars, also limits the process. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 This strategy tends to hold smaller, more growth-oriented companies compared with its average peer in the Large Growth Morningstar Category. Analyzing additional factors, this strategy has held more highly liquid stocks compared to Morningstar Category Peers in the past few years. More-liquid assets are easier to buy and sell without adversely moving their prices and tend to provide some ballast during market selloffs. They also are easier to sell to meet redemptions if a host of investors decide to leave the fund in a short period of time. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has had lower exposure to momentum stocks over peers in recent years. Momentum strategies typically bet that stocks that have recently outperformed will continue to do so, and those that have recently underperformed will keep lagging. Avoiding the former and buying the latter could indicate that managers are averse to chasing momentum. Similarly, in recent months, the strategy also had less exposure to the Momentum factor than peers. This strategy also has tilted toward low-quality stocks, companies with higher financial leverage and lower profitability over these years. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. In recent months, the strategy also had less Quality 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 real estate by 3.7 percentage points in terms of assets compared with the category average, and its consumer defensive allocation is similar to the category. The sectors with low exposure compared to category peers are communication services and healthcare, with communication services underweighting the average portfolio by 3.9 percentage points of assets and healthcare similar to the average. The portfolio is composed of 41 holdings and is less top-heavy than peers. Specifically, 26.6% of the fund’s assets are concentrated within the top 10 fund holdings, compared to the typical peer's 53.2%.

Below Average

Process

FT Raymond James Multcp Gr Eq ETF earns an Average People Pillar rating. Roger F. Testin, the longest-tenured manager on the strategy, boasts over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.6 stars, reflecting below-average risk-adjusted performance versus category peers. The team is composed of a solid supporting cast of six additional named managers, averaging 22 years of listed portfolio management experience. As a team, they manage 108 investment vehicles together, with a Bronze asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha in aggregate. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Average

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

FT Raymond James Multicap Growth Equity ETF

RJMG holds a portfolio of US growth stocks rated as strong buy or outperform by the sub-advisor's proprietary equity research model. The actively managed fund seeks long-term capital appreciation.

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First Trust Dynamic Europe Equity Income Fund

First Trust Advisors has launched an actively managed ETF that seeks to provide long-term capital appreciation. The FT Raymond James Multicap Growth Equity ETF (NYSE Arca: RJMG) invests in U.S.-listed equities that exhibit growth characteristics.

First Trust, Raymond James Launch Multicap Growth Equity ETF

WHEATON, Ill.--(BUSINESS WIRE)--First Trust Advisors L.P. (“First Trust”), a leading exchange-traded fund (“ETF”) provider and asset manager, announced today that it has launched a new actively managed ETF that seeks to provide long-term capital appreciation, the FT Raymond James Multicap Growth Equity ETF (NYSE Arca: RJMG) (“the fund”). The Model Portfolio is developed and overseen by the fund's non-discretionary investment sub-advisor, Raymond James & Associates, Inc. (“Raymond James”). “.

News for FT Raymond James Multicap Growth Equity ETF ETF (RJMG)