First Trust RiverFront Dynamic Emerging Markets ETF (RFEM US) – Portfolio Construction Methodology

The investment strategy underpinning the actively managed First Trust RiverFront Dynamic Emerging Markets ETF targets capital appreciation from emerging-markets equities while dynamically managing currency risk. RiverFront narrows the universe via top-down screens for liquidity, investability and data quality, then scores geographies with a quantitative matrix blending fundamental and technical momentum. A proprietary valuation model and qualitative review set country/region and thematic rotations; securities within favored markets are chosen using value and momentum disciplines. The portfolio invests ≥80% of net assets in equity of emerging-market issuers, including common stock, depositary receipts and REITs, and can dial a forward-FX hedge between 0–100% to dampen currency volatility. Position sizing reflects relative attractiveness, with larger weights in the most compelling regions and names; exposures are rebalanced as valuation, momentum and risk inputs change. Use of OTC forwards introduces counterparty and liquidity considerations that are monitored.

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