First Trust has launched a batch of smart-beta exchange traded funds to help investors focus on dividend-paying U.S. stocks and low-volatility international components, along with a California state-specific municipal bond ETF option.
The seven new First Trust ETFs include:
- First Trust Large Cap US Equity Select ETF (NasdaqGS: RNLC) 0.60% expense ratio
- First Trust Mid Cap US Equity Select ETF (NasdaqGS: RNMC) 0.60% expense ratio
- First Trust Small Cap US Equity Select ETF (NasdaqGS: RNSC) 0.60% expense ratio
- First Trust US Equity Dividend Select ETF (NasdaqGS: RNDV) 0.50% expense ratio
- First Trust Developed International Equity Select ETF (NasdaqGS: RNDM) 0.65% expense ratio
- First Trust Emerging Markets Equity Select ETF (NasdaqGS: RNEM) 0.77% expense ratio
- First Trust California Municipal High Income ETF (NYSEArca: FCAL) 0.50% expense ratio
The six smart beta ETFs track indices developed and sponsored by Riskalyze Inc, a financial technology company that develops platforms to to capture quantitative measurements of client and portfolio risk for investment advisors.
The large-, mid-, small-cap and equity dividend ETFs all include some form of dividend-focused screens along with a neutral approach to sectors.
Specifically, the large-, mid- and small-cap smart beta ETFs screen out issuers that have not paid a dividend in the trailing 12 months and are then equally weighted within a sector while the dividend ETF screens out those that have not paid a dividend in the trailing 12 months or have a dividend yield lower than the base index’s yield and securities with higher dividend yields are given greater weights in the index relative to the remaining securities.
On the other hand, the emerging and developed international smart beta ETFs include volatility screens along with a neutral approach to sectors.
The two ETFs rank securities by trailing 12 month volatility within their respective countries and the 25 securities with the lowest volatility from each country are selected for inclusion in the index and equally weighted within a sector.
Lastly, the California Municipal High Income ETF will largely hold investment-grade municipal securities issued on behalf of the State of California, including municipal lease obligations (and certificates of participation in such obligations), municipal general obligation bonds,municipal revenue bonds, municipal notes, municipal cash equivalents, private activity bonds (including without limitation industrial development bonds), and prerefunded and escrowed to maturity bonds, according to the prospectus. Additionally, the fund may hold no more than 50% of its assets in high-yield or junk bonds.
For more information on new fund products, visit our new ETFs category.