First Trust unveils three actively managed global equity ETFs

Apr 19th, 2016 | By | Category: Equities

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First Trust, a US-based provider of exchange-traded funds, has launched three new ETFs on the Nasdaq Exchange. The First Trust RiverFront Dynamic Europe ETF (RFEU), First Trust RiverFront Dynamic Asia Pacific ETF (RFAP), and First Trust RiverFront Dynamic Developed International ETF (RFDI) are all managed by asset manager RiverFront Investment Group. 

Chris Konstantinos, RiverFront’s Director of International Portfolio Management

Chris Konstantinos, RiverFront’s Director of International Portfolio Management

RiverFront will use its proprietary methodology, which employs a quantitative and qualitative ranking system based on factors that include value, quality and momentum, to actively select securities that may outperform the broad market. Currency hedging and risk management are also integral parts of the active management of these ETFs.

Michael Jones, Chairman and Chief Investment Officer of RiverFront, said in a statement: “We believe that active management is essential in today’s fast-moving markets. These ETFs are unique to the marketplace in that they offer active management of the underlying equity portfolio and a dynamic approach to currency hedging, all within the structure of an ETF.”

Commenting on the benefits of ETFs, Jones noted: “We believe financial advisors are seeking actively managed ETF portfolios that make greater use of the inherent tax advantages of the ETF structure and traditionally lower cost relative to actively managed mutual funds. RiverFront is especially proud to be collaborating with First Trust on these innovative investment solutions.”

The funds seek capital appreciation through exposure to global economies and the opportunities they represent. Each ETF invests in a portfolio of equity securities of their respective regions that may include common stock, depositary receipts and real estate investment trusts. Furthermore each fund has the flexibility to engage in forward foreign currency exchange contracts to partially or fully hedge their exposure against the US dollar. Each fund charges an all-in management fee of 0.83%.

As of 15 April 2016, the First Trust RiverFront Dynamic Europe ETF had 296 holdings and significant country exposure to France (21.2%), Germany (19.5%), the UK (18.1%), Spain (9.9%) and the Netherlands (7.6%). The major sector exposures were to consumer staples (18.5%), industrials (16.3%), consumer discretionary (15.6%), financials (14.2%) and health care (10.6%).

As of 15 April 2016, the First Trust RiverFront Dynamic Asia Pacific ETF had 147 holdings and significant country exposure to Japan (59.5%), Australia (29.2%) and Hong Kong (7.3%). The major sector exposures were to financials (35.7%), industrials (18.0%), consumer discretionary (12.3%), consumer staples (7.7%) and materials (6.6%).

As of 15 April 2016, the First Trust RiverFront Dynamic Developed International ETF had 408 holdings and significant country exposure to France (15.8%), Japan (14.8%), Germany (14.5%), the UK (13.5%) and Australia (7.9%). The major sector exposures were in financials (20.0%), industrials (16.3%), consumer staples (15.7%), consumer discretionary (14.7%) and health care (9.7%).

Chris Konstantinos, RiverFront’s Director of International Portfolio Management, said: “We believe stocks across the developed world have pulled back to attractive valuations and that investors have underestimated the positive impact that lower oil prices and continued aggressive monetary policy will have on developed international economies.”

Ryan Issakainen, CFA, Senior Vice President, ETF Strategist at First Trust, added: “Navigating today’s complex and ever-evolving global economy is no easy task. We believe this group of ETFs provides an efficient set of tools for financial advisors to use when allocating to developed international equity markets, aided by RiverFront’s insight and expertise of security selection, asset allocation, and dynamic currency hedging.”

The funds’ portfolio managers include Chris Konstantinos, CFA; and Michael Jones, CFA; as well as Adam Grossman, CFA; Kevin Nicholson, CFA; Sam Turner, CMT; Doug Sandler, CFA; and Scott Hays, who share responsibilities for the day-to-day management of each fund’s investment portfolio.

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