An index-tracking ETF that provides exposure to
companies that may have lasting competitive advantages over their
peers
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 ETF, the First Trust S&P 500
Economic Moat ETF (NYSE Arca: EMOT) (the “fund”). The fund seeks
investment results that correspond generally to the price and yield
(before the fund’s fee and expenses) of an equity index called the
S&P 500 Economic Moat Index (the “index”).
“As a pioneer of factor-based indexing, the new S&P 500
Economic Moat Index further expands S&P Dow Jones Indices’
rules-based factor index capabilities,” said Rupert Watts, Head of
Factors and Dividend Indices at S&P Dow Jones Indices.
“Purposefully designed to present differentiated factor solutions,
the S&P 500 Economic Moat Index systematically identifies and
measures companies that have long-term competitive advantages.”
An “economic moat” refers to a structural business
characteristic that provides sustainable competitive advantages
over competitors to preserve market share and profits. While no
single metric is the sole indicator of an economic moat, one can be
created via several components, such as a company’s economies of
scale, patent-protected technology or products, strong brand
recognition, high switching costs, among others. EMOT provides a
quantitative approach to identifying quality companies with
sustained high return on invested capital (“ROIC”), sustained high
gross margins, and high market share.
“We believe that high-quality stocks with strong and growing
competitive advantages may have an edge over their peers,” said
Ryan Issakainen, CFA, Senior Vice President and ETF Strategist at
First Trust. “EMOT employs a rigorous, quantitatively-driven
approach to investing in these stocks.”
For more information about First Trust, please contact Ryan
Issakainen at (630) 765-8689 or RIssakainen@FTAdvisors.com.
About First Trust
First Trust is a federally registered investment advisor and
serves as the fund’s investment advisor. First Trust and its
affiliate First Trust Portfolios L.P. (“FTP”), a FINRA registered
broker-dealer, are privately held companies that provide a variety
of investment services. First Trust has collective assets under
management or supervision of approximately $226 billion as of May
31, 2024 through unit investment trusts, exchange-traded funds,
closed-end funds, mutual funds and separate managed accounts. First
Trust is the supervisor of the First Trust unit investment trusts,
while FTP is the sponsor. FTP is also a distributor of mutual fund
shares and exchange-traded fund creation units. First Trust and FTP
are based in Wheaton, Illinois. For more information, visit
http://www.ftportfolios.com.
You should consider a fund’s investment objectives, risks,
and charges and expenses carefully before investing. Contact First
Trust Portfolios L.P. at 1-800-621-1675 or visit
www.ftportfolios.com to obtain a prospectus or summary
prospectus which contains this and other information about a fund.
The prospectus or summary prospectus should be read carefully
before investing.
Risk Considerations
You could lose money by investing in a fund. An investment in
a fund is not a deposit of a bank and is not insured or guaranteed.
There can be no assurance that a fund's objective(s) will be
achieved. Investors buying or selling shares on the secondary
market may incur customary brokerage commissions. Please refer to
each fund's prospectus and Statement of Additional Information for
additional details on a fund's risks. The order of the below risk
factors does not indicate the significance of any particular risk
factor.
Unlike mutual funds, shares of the fund may only be redeemed
directly from a fund by authorized participants in very large
creation/redemption units. If a fund's authorized participants are
unable to proceed with creation/redemption orders and no other
authorized participant is able to step forward to create or redeem,
fund shares may trade at a premium or discount to a fund's net
asset value and possibly face delisting and the bid/ask spread may
widen.
The success of consumer discretionary companies is tied closely
to the performance of the overall U.S. and international economies,
interest rates, competition, consumer confidence, disposable
household income and consumer spending. Changes in demographics and
consumer tastes can also affect the demand for consumer
discretionary products.
Current market conditions risk is the risk that a particular
investment, or shares of the fund in general, may fall in value due
to current market conditions. As a means to fight inflation, the
Federal Reserve and certain foreign central banks have raised
interest rates and expect to continue to do so, and the Federal
Reserve has announced that it intends to reverse previously
implemented quantitative easing. Recent and potential future bank
failures could result in disruption to the broader banking industry
or markets generally and reduce confidence in financial
institutions and the economy as a whole, which may also heighten
market volatility and reduce liquidity. Ongoing armed conflicts
between Russia and Ukraine in Europe and among Israel, Hamas and
other militant groups in the Middle East, have caused and could
continue to cause significant market disruptions and volatility
within the markets in Russia, Europe, the Middle East and the
United States. The hostilities and sanctions resulting from those
hostilities have and could continue to have a significant impact on
certain fund investments as well as fund performance and liquidity.
The COVID-19 global pandemic, or any future public health crisis,
and the ensuing policies enacted by governments and central banks
have caused and may continue to cause significant volatility and
uncertainty in global financial markets, negatively impacting
global growth prospects.
A fund is susceptible to operational risks through breaches in
cyber security. Such events could cause a fund to incur regulatory
penalties, reputational damage, additional compliance costs
associated with corrective measures and/or financial loss.
Equity securities may decline significantly in price over short
or extended periods of time, and such declines may occur in the
equity market as a whole, or they may occur in only a particular
country, company, industry or sector of the market.
An index fund will be concentrated in an industry or a group of
industries to the extent that the index is so concentrated. A fund
with significant exposure to a single asset class, or the
securities of issuers within the same country, state, region,
industry, or sector may have its value more affected by an adverse
economic, business or political development than a broadly
diversified fund.
A fund may be a constituent of one or more indices or models
which could greatly affect a fund's trading activity, size and
volatility.
There is no assurance that the index provider or its agents will
compile or maintain the index accurately. Losses or costs
associated with any index provider errors generally will be borne
by a fund and its shareholders.
Information technology companies are subject to certain risks,
including rapidly changing technologies, short product life cycles,
fierce competition, aggressive pricing and reduced profit margins,
loss of patent, copyright and trademark protections, cyclical
market patterns, evolving industry standards and regulation and
frequent new product introductions.
Large capitalization companies may grow at a slower rate than
the overall market.
Market risk is the risk that a particular security, or shares of
a fund in general may fall in value. Securities are subject to
market fluctuations caused by such factors as general economic
conditions, political events, regulatory or market developments,
changes in interest rates and perceived trends in securities
prices. Shares of a fund could decline in value or underperform
other investments as a result. In addition, local, regional or
global events such as war, acts of terrorism, spread of infectious
disease or other public health issues, recessions, natural
disasters or other events could have significant negative impact on
a fund.
A fund faces numerous market trading risks, including the
potential lack of an active market for fund shares due to a limited
number of market makers. Decisions by market makers or authorized
participants to reduce their role or step away in times of market
stress could inhibit the effectiveness of the arbitrage process in
maintaining the relationship between the underlying values of a
fund's portfolio securities and a fund's market price.
Large inflows and outflows may impact a new fund's market
exposure for limited periods of time.
An index fund's return may not match the return of the index for
a number of reasons including operating expenses, costs of buying
and selling securities to reflect changes in the index, and the
fact that a fund's portfolio holdings may not exactly replicate the
index.
A fund classified as "non-diversified" may invest a relatively
high percentage of its assets in a limited number of issuers. As a
result, a fund may be more susceptible to a single adverse economic
or regulatory occurrence affecting one or more of these issuers,
experience increased volatility and be highly concentrated in
certain issuers.
A fund and a fund's advisor may seek to reduce various
operational risks through controls and procedures, but it is not
possible to completely protect against such risks. The fund also
relies on third parties for a range of services, including custody,
and any delay or failure related to those services may affect the
fund's ability to meet its objective.
A fund that invests in securities included in or representative
of an index will hold those securities regardless of investment
merit and the fund generally will not take defensive positions in
declining markets.
The market price of a fund's shares will generally fluctuate in
accordance with changes in the fund's net asset value ("NAV") as
well as the relative supply of and demand for shares on the
exchange, and a fund's investment advisor cannot predict whether
shares will trade below, at or above their NAV.
Trading on an exchange may be halted due to market conditions or
other reasons. There can be no assurance that a fund's requirements
to maintain the exchange listing will continue to be met or be
unchanged.
First Trust Advisors L.P. is the adviser to the fund. First
Trust Advisors L.P. is an affiliate of First Trust Portfolios L.P.,
the fund’s distributor.
The information presented is not intended to constitute an
investment recommendation for, or advice to, any specific person.
By providing this information, First Trust is not undertaking to
give advice in any fiduciary capacity within the meaning of ERISA,
the Internal Revenue Code or any other regulatory framework.
Financial professionals are responsible for evaluating investment
risks independently and for exercising independent judgment in
determining whether investments are appropriate for their
clients.
The S&P 500 Economic Moat Index ("Index") is a product of
S&P Dow Jones Indices LLC or its affiliates ("SPDJI") and has
been licensed for use by First Trust. S&P®, S&P 500®, US
500 and The 500 are trademarks of Standard & Poor's Financial
Services LLC ("S&P"); Dow Jones® is a registered trademark of
Dow Jones Trademark Holdings LLC ("Dow Jones"); and these
trademarks have been licensed for use by SPDJI and sublicensed for
certain purposes by First Trust. The Fund is not sponsored,
endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their
respective affiliates and none of such parties make any
representation regarding the advisability of investing in such
product nor do they have any liability for any errors, omissions,
or interruptions of the Index.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240627610675/en/
Ryan Issakainen First Trust (630) 765-8689
RIssakainen@FTAdvisors.com