First Trust has launched a new ETF, bringing the firm’s thematic line-up to a total of 26 offerings, and it has evolved two existing products to better meet the needs of advisors.
The First Trust S-Network Streaming & Gaming ETF (BNGE) listed on the NYSE on January 26.
At the same time, the First Trust NASDAQ Global Auto Index Fund (CARZ) has changed to the First Trust S-Network Future Vehicles & Technology ETF (CARZ), and the First Trust Nasdaq Retail ETF (FTXD) has changed to the First Trust S-Network Global E-Commerce ETF (ISHP). Both funds are listed on the Nasdaq.
Ryan Issakainen, ETF strategist for First Trust, said that the firm’s thematic offerings can best fit into the satellite portion of an advisor’s portfolio because the funds tend to focus on very specific, higher growth areas.
“If you look at long term products that have the opportunity to outperform, they don’t tend to be the broad categories, they tend to be very narrow,” Issakainen said. “If you can make use of those, we think you have an opportunity to add value.”
The new fund, BNGE, is aiming to capitalize on the streaming and gaming ecosystem — an area which the firm thinks is still at an early stage with plenty of growth opportunities ahead.
BNGE provides exposure to companies engaged in online services related to gaming and content streaming that enable remote users to access online content, publish online content, participate in prospective wagering, and spectate or participate in competitive video gaming, and that provide products, services, and technology that are necessary for the streaming and gaming industries.
“We’ve got a whole demographic of people that were brought up playing video games, so we’re at a point now where the shift to wealth for those people is going to make a big difference,” Issakainen said.
First Trust has changed the index behind CARZ to meet the evolving industry. CARZ, launched in 2011, had historically provided exposure to the traditional automobile industry.
“We’re at a point now, where the industry is shifting and changing, and there’s a lot of innovation happening that hasn’t for quite some time,” Issakainen said. “We’ve listened to demand from our clients and from investment professionals who tell us that they want exposure to some of the companies that are going to enable this transition to electric vehicles to take place – some of the raw material manufacturers, the battery companies.”
In the case of ISHP, the firm took FTXD, which was providing exposure to the retail industry, and revamped it to meet the changing retail ecosystem.
“Retail has changed dramatically in a relatively short period of time, and so we want to update the indices that we’re tracking to provide the sort of exposure that people are looking for,” Issakainen said. “We did want to provide exposure to…not necessarily the old brick and mortar retailers, but really where the next wave of growth is going to come from.”
First Trust chose to partner with Alerian and S-Network to provide the indexes for these ETFs due to their vast experience in developing indexes for issuers.
“We have known the folks at Alerian for quite some time,” Issakainen said. “They’re veterans in the industry, and so we’re confident in their ability to deliver the sorts of underlying indices that we think are going to give our fund the kind of exposure that advisors want, and we’re confident in their ability to provide that support and that data for our portfolios.”
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