First Trust launches trio of actively managed US multi-factor ETFs

Dec 5th, 2019 | By | Category: Equities

FACTOR INVESTING - THURSDAY 14TH JULY 2022 (08:15-11:30) - THE BERKELEY, LONDON Please join us for our annual factor investing breakfast briefing with participation from MSCI, FlexShares ETFs, Tabula and Professor Stefan Zohren, Deputy Director of the Oxford-Man Institute of Quantitative Finance. Please register now if you would like to attend.


First Trust has launched three new ETFs providing actively managed multi-factor exposure to portfolios of large-, mid-, and small-cap equities listed in the US.

Ryan Issakainen, Senior Vice President, ETF Strategist at First Trust.

Ryan Issakainen, Senior Vice President, ETF Strategist at First Trust.

The funds, which have listed on NYSE Arca, are the First Trust Active Factor Large Cap ETF (AFLG US), the First Trust Active Factor Mid Cap ETF (AFMC US), and the First Trust Active Factor Small Cap ETF (AFSM US).

The ETFs are based on a quantitative investment process that seeks to identify stocks with exposure to at least one of the following factor risk premia: value, momentum, quality, and low volatility.

Stock selection is managed by an investment committee based on insights from First Trust’s research and portfolio management divisions.

First Trust argues that active risk management allows the funds to ensure diversification at the sector, industry, and stock levels as well as reducing unnecessary portfolio turnover. It also gives the ETFs the flexibility to alter factor exposures in response to changes in market conditions, emergent academic research, or other considerations.

The large-, mid-, and small-cap ETFs come with expense ratios of 0.55%, 0.65%, and 0.75%, respectively. Each has been seeded with $2 million in assets.

Ryan Issakainen, Senior Vice President, ETF Strategist at First Trust, commented, “Factor-based investing has gained popularity among investment advisors over the past several years, and First Trust has been a leading provider of factor ETFs for well over a decade.

“One of the challenges that advisors face in utilizing factor ETFs is determining how to combine these factors, especially as valuations and other attributes evolve over time. These actively managed ETFs harness First Trust’s expertise to target exposure to rewarded factor premiums, while also attempting to mitigate unintended biases and manage overall portfolio risk.”

Tags: , , , , , , , ,

Leave a Comment