Weakness in FT Cboe Vest SMID Ris Div Ach Trg IncETF's People and Process Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The longest-tenured manager has a wealth of experience, but due to other weaknesses, the strategy earns a Below Average People Pillar. The strategy gets a Below Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. 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, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Dell Technologies

Perdoceo Education

Corebridge Financial Inc

Sylvamo Corp

Jackson Financial

PHINIA Inc

Kontoor Brands Inc

Garmin

Meritage Homes

EMCOR Group

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. FT Cboe Vest SMID Ris Div Ach Trg IncETF earns a Below Average Process Pillar rating. 

The process benefits from low expenses across its parent firm's funds, whose fees rank in their respective category's second-cheapest quintile on average. The pattern of low expenses at the firm suggests that it is focused on delivering strong results for investors. However, the rating is weakened 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 beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup. The parent firm's subpar 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 undervalued companies than its average peer in the Mid-Cap Value Morningstar Category. Looking at additional factor exposure, this fund has constantly tilted toward stocks with higher trading volumes than its Morningstar Category Peers over the past few years. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. In recent months, the strategy was more exposed to the Liquidity 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. Such holdings could cause it to trail peers during economic booms, but help it better endure busts. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. Additionally, the managers have consistently taken on more risk, demonstrated by higher volatility exposure than peers. Such exposure tends to pay off when markets are hot and to be costly when they are not. In this month, the strategy also had more exposure to the Volatility 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 financial services and basic materials relative to the category average by 13.3 and 5.8 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and utilities, underweight the average by 9.3 and 6.6 percentage points of assets, respectively. The strategy owns 102 securities and is diversified among those holdings. In its most recent portfolio, 10.8% of the fund’s assets were concentrated in the top 10 fund holdings, compared to the category average's 17.7%. And in closing, in terms of portfolio turnover, on a year-over-year basis, 29% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Below Average

Process

FT Cboe Vest SMID Ris Div Ach Trg IncETF earns a Below Average People Pillar rating. The team benefits from the portfolio managers' outperformance of peers at the funds they run, as measured by their combined three-year manager excess returns. However, the rating is held back by 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 modest success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 67% also detracts from the team.


The team is backed by Howard Rubin, the longest-tenured manager on the strategy, who brings 24 years of listed portfolio management experience.  Howard Rubin has an experienced listed co-manager. Together, they average 16 years of listed portfolio management experience. The team's personal investments in the fund are insignificant, with the maximum investment by either manager being less than $10,000. That amount is too small to help align managers' 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

FT Cboe Vest SMID Rising Dividend Achievers Target Income ETF

SDVD is an actively managed fund that seeks to provide a target level of current income and capital appreciation by holding a portfolio of dividend-paying small- and mid-cap companies. The fund also utilizes a naked call writing option strategy on the Russell 2000 Index (RUT) or related ETFs.

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First Trust Long Duration Opportunities ETF

First Trust Low Duration Opportunities ETF

First Trust Multi-Asset Diversified Income Index Fund

First Trust Municipal CEF Income Opportunity ETF

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FT Cboe Vest Rising Dividend Achievers Target Income Etf

First Trust Structured Credit Income Opportunities ETF

FT Cboe Vest Technology Dividend Target Income ETF

First Trust TCW Unconstrained Plus Bond ETF

WHEATON, Ill.--(BUSINESS WIRE)--First Trust Advisors L.P. ("FTA") announces the declaration of the monthly distributions for certain exchange-traded funds advised by FTA. The following dates apply to today's distribution declarations: Expected Ex-Dividend Date: April 23, 2024 Record Date: April 24, 2024 Payable Date: April 30, 2024 Ticker   Exchange   Fund Name   Frequency   Ordinary Income Per Share Amount   ACTIVELY MANAGED EXCHANGE-TRADED FUNDS   First Trust Exchange-Traded Fund III FCAL   N.

First Trust Advisors L.P. Announces Distributions for Exchange-Traded Funds

WHEATON, Ill.--(BUSINESS WIRE)--First Trust Advisors L.P. (“First Trust” or “FTA”), a leading provider of exchange-traded funds (“ETFs”) and outcome-based strategies, today announced it has launched the FT Cboe Vest SMID Rising Dividend Achievers Target Income ETF (Cboe: SDVD) and the FT Cboe Vest Technology Dividend Target Income ETF (Cboe: TDVI). Both funds are actively managed ETFs that seek to provide investors with current income and have a secondary objective of capital appreciation.

First Trust Expands Its Target Income ETF® Lineup with Two New Funds

News for FT Cboe Vest SMID Rising Dividend Achievers Target Income ETF ETF (SDVD)