First Trust launches US and international equity ETFs

Jun 21st, 2017 | By | Category: Equities

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First Trust has launched a series of new ETFs on NASDAQ. Six of the new funds are smart beta equity strategies and one invests in California municipal debt.

First Trust launches 7 new ETFs

First Trust now has 107 ETFs listed on NASDAQ. (file image/© NASDAQ) 

The six smart beta ETFs and their respective expense ratios are as follows:

First Trust Large Cap US Equity Select ETF (RNLC), 0.60%
First Trust Mid Cap US Equity Select ETF (RNMC), 0.60%
First Trust Small Cap US Equity Select ETF (RNSC), 0.60%
First Trust US Equity Dividend Select ETF (RNDV), 0.50%
First Trust Developed International Equity Select ETF (RNDM), 0.65%
First Trust Emerging Markets Equity Select ETF (RNEM), 0.77%

The overarching theme that links the new smart beta funds is a methodology that tilts towards certain factors while maintaining sector weights equal to their respective parent indices.

The methodology of the US equity funds with a size segment focus– RNLC, RNMC and RNSC – begins by excluding any constituents of the respective parent index that have not paid a dividend in the preceding 12 months. Sector weights are set equal to those of the corresponding parent benchmark, and companies within each sector are then equally weighted.

RNDV follows a similar procedure but weights companies by dividend yield rather than equally, while remaining sector neutral with the parent index.

The two international equity funds, RNDM and RNEM, also maintain sector neutrality but stock weights are calculated by trailing 12-month volatility relative to other stocks from the same country.

The new fixed income ETF, the First Trust California Municipal High Income ETF (FCAL), is an actively managed fund that invests in the California municipal bond market. The fund will invest at least 80% of its assets in municipal debt securities that pay interest exempt from federal and California income taxes.

In addition to California, the fund can invest in debt from US territories such as the US Virgin Islands and Puerto Rico, and at least 50% of the portfolio much be rated as investment grade at the time of purchase. The fund distributes income monthly and the expense ratio is 0.50%.

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