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First Trust/Confluence Small Cap Value Fund (FOVCX)
  • 2018 Estimated Capital Gain Distributions
    Certain First Trust Open-End Funds are expected to pay a long-term capital gain distribution in December. For a list of open-end funds expected to pay a long-term capital gain distribution, please click here. Final determination of the source and tax status of all distributions paid in the current year are to be made after year-end and could differ from the expectations noted above.
Investment Objective/Strategy - The Fund seeks to provide long-term capital appreciation by investing, under normal market conditions, at least 80% of its net assets (including investment borrowings) in equity securities of U.S. listed companies with small market capitalizations at the time of investment.
There can be no assurance that the Fund's investment objectives will be achieved. The Fund may not be appropriate for all investors.
Fund Overview
Fund TypeSmall-Cap Value
Investment AdvisorFirst Trust Advisors L.P.
Portfolio Manager/Sub-AdvisorConfluence Investment Management LLC
Share ClassClass C
Fiscal Year-End10/31
Inception Date3/2/2011
Minimum Investment Amount$2,500
Minimum Subsequent Investment Amount$50
Contingent Deferred Sales Charge1.00%
Gross Expense Ratio*4.45%
Net Expense Ratio*2.35%
* As of 7/2/2018
Pursuant to contract, First Trust has agreed to waive fees and/or pay fund expenses to prevent the net expense ratio of any class of shares of the fund from exceeding 1.35% per year, excluding 12b-1 distribution and service fees, acquired fund fees and expenses and certain other expenses as described in the prospectus, through 2/28/2019, and to not exceed 1.70% per year from 3/01/2019 through 2/28/2028. Net expense ratio shown above includes 12b-1 distribution and service fees, acquired fund fees and certain other expenses as described in the prospectus.
Current Fund Data (as of 12/14/2018)
Net Asset Value1$27.80
Total Net Assets$20,237,062
Outstanding Shares114,311
NAV 52-Week High/Low$34.58 / $27.80
Fund Characteristics (as of 11/30/2018)3,4
Maximum Market Cap.$8,201
Median Market Cap.$1,012
Minimum Market Cap.$205
Price/Cash Flow16.09
Top 10 Holdings (as of 11/30/2018)4
Holding Percent
Morningstar, Inc. 3.82%
Northwest Natural Holding Co 3.42%
RBC Bearings, Inc. 3.41%
Movado Group, Inc. 3.39%
Gladstone Commercial Corp. 3.28%
Allied Motion Technologies 3.26%
frontdoor, Inc. 3.24%
Resources Connection, Inc. 3.23%
SJW Group 3.23%
Cannae Holdings, Inc. 3.21%
NAV History (Since Inception)
Past performance is not indicative of future results.
Distribution Information
Dividend FrequencySemi-Annual
Dividend per Share Amt (as of 12/16/2018)2$1.9349
Industry Breakdown (as of 11/30/2018)4
  Industry Percent
Machinery 9.13%
Electrical Equipment 6.40%
Equity Real Estate Investment Trusts 6.38%
Banks 6.11%
Textiles, Apparel & Luxury Goods 5.25%
Health Care Equipment & Supplies 5.15%
IT Services 4.35%
Capital Markets 3.82%
Hotels, Restaurants & Leisure 3.67%
Gas Utilities 3.42%
Diversified Consumer Services 3.24%
Professional Services 3.23%
Water Utilities 3.23%
Diversified Financial Services 3.21%
Personal Products 3.20%
Air Freight & Logistics 3.07%
Electronic Equipment, Instruments & Components 3.07%
Real Estate Management & Development 2.95%
Health Care Providers & Services 2.92%
Insurance 2.89%
Paper & Forest Products 2.82%
Life Sciences Tools & Services 2.79%
Industrial Conglomerates 2.54%
Software 2.53%
Pharmaceuticals 2.52%
Chemicals 2.11%
Month End Performance (as of 11/30/2018)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund Performance *
Without Sales Charge -12.83% -2.15% -1.83% 10.03% 7.07% N/A 8.42%
With Sales Charge -13.70% -3.13% -2.75% 10.03% 7.07% N/A 8.42%
Index Performance **
Russell 2000® Value Index -9.78% -0.88% -1.83% 10.08% 6.71% N/A 9.15%
Russell 2000® Index -11.62% 0.98% 0.57% 10.08% 7.50% N/A 10.07%
Quarter End Performance (as of 9/28/2018)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund Performance *
Without Sales Charge 5.15% 11.14% 17.78% 17.29% 11.04% N/A 10.45%
With Sales Charge 4.15% 10.14% 16.78% 17.29% 11.04% N/A 10.45%
Index Performance **
Russell 2000® Value Index 1.60% 7.14% 9.33% 16.12% 9.91% N/A 10.49%
Russell 2000® Index 3.58% 11.51% 15.24% 17.12% 11.07% N/A 11.76%

*Performance data quoted represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares when sold or redeemed, may be worth more or less than their original cost. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative.

**Indexes are unmanaged and an investor cannot invest directly in an index.

The Russell 2000® Value Index measures the performance of the small-cap segment of the U.S. equity universe. It includes those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Value Index is constructed to provide a comprehensive and unbiased barometer for the small-cap value segment.

The Russell 2000® Index is comprised of the smallest 2000 companies in the Russell 3000 Index.

1 The NAV represents the fund's net assets (assets less liabilities) divided by the fund's outstanding shares .
2 Most recent distribution paid or declared to today's date. Subject to change in the future. There is no guarantee that the fund will declare dividends.
3 All market capitalization numbers are in USD$ Millions.
4 Market value information used in calculating the percentages is based upon trade date plus one recording of transactions, which can differ from regulatory financial reports (Forms N-CSR and N-Q) that are based on trade date recording of security transactions. Holdings are subject to change.
5 Inception Date is 3/2/2011

You should consider the fund's investment objectives, risks, and charges and expenses carefully before investing. You can download a prospectus or summary prospectus, or contact First Trust Portfolios L.P. at 1-800-621-1675 to request a prospectus or summary prospectus which contains this and other information about the fund. The prospectus or summary prospectus should be read carefully before investing.

The Fund is subject to the following risks:

You could lose money by investing in the Fund. There can be no assurance that the Fund will achieve its investment objectives. A mutual fund's share price and investment return will vary with market conditions, and the principal value of an investment when you sell your shares may be more or less than the original cost.

BDC RISK . The Fund may invest in BDCs which may carry risks similar to those of a private equity or venture capital fund. BDCs are not redeemable at the option of the shareholder and they may trade in the market at a discount to their net asset value. The BDCs held by the Fund may employ the use of leverage their portfolios through borrowings or the issuance of preferred stock. While leverage often serves to increase the yield of a BDC, this leverage also subjects a BDC to increased risks, including the likelihood of increased volatility and the possibility that a BDC's common share income will fall if the dividend rate of the preferred shares or the interest rate on any borrowings rises.

CONCENTRATION RISK . A fund concentrated in one or more industries or sectors is likely to present more risks than a fund that is broadly diversified over several industries or sectors. Compared to the broad market, an individual industry or sector may be more strongly affected by changes in the economic climate, broad market shifts, moves in a particular dominant stock, or regulatory changes.

CYBER SECURITY RISK. As the use of Internet technology has become more prevalent in the course of business, the Fund has become more susceptible to potential operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized access to the Fund's digital information systems through "hacking" or malicious software coding, but may also result from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition, cyber security breaches of the Fund's third party service providers, such as its administrator, transfer agent, custodian, or sub-advisor, as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber security breaches. The Fund has established risk management systems designed to reduce the risks associated with cyber security. However, there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems of issuers or third party service providers.

EQUITY SECURITIES RISK. Because the Fund invests in equity securities, the value of the Fund's shares will fluctuate with changes in the value of these equity securities. Equity securities prices fluctuate for several reasons, including changes in investors' perceptions of the financial condition of an issuer or the general condition of the relevant stock market, such as market volatility, or when political or economic events affecting the issuers occur. In addition, common stock prices may be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase.

INDUSTRIALS AND PRODUCER DURABLES COMPANIES RISK. The Fund invests in the securities of industrials and producer durables companies, which convert unfinished goods into finished durables used to manufacture other goods or provide services. Some industrials companies are involved in electrical equipment and components, industrial products, manufactured housing and telecommunications equipment. General risks of industrials companies include the general state of the economy, intense competition, consolidation, domestic and international politics, excess capacity and consumer demand and spending trends. In addition, they may also be significantly affected by overall capital spending levels, economic cycles, technical obsolescence, delays in modernization, labor relations, government regulations and e-commerce initiatives.

INVESTMENT COMPANIES RISK. If the Fund invests in investment companies, Fund shareholders bear both their proportionate share of Fund expenses and, indirectly, the expenses of the investment companies. Also, the investment companies are subject to the risks of the underlying securities that they hold. In addition, the Fund will incur brokerage costs when purchasing and selling shares of ETFs and closed-end investment companies. Closed-end investment companies may be leveraged, in which case the value and/or yield of their shares will tend to be more volatile than shares of unleveraged funds. In addition, for index-based ETFs, the performance of an ETF may diverge from the performance of such index (commonly known as tracking error). Moreover, shares of closed-end investment companies and ETFs may be sold at a discount from their net asset value.

MARKET CAPITALIZATION RISK. The Fund normally invests at least 80% of its assets in Small-Cap Companies. Because the market capitalization is measured at the time of its initial purchase, the Fund will not be forced to sell a stock because the stock has exceeded or fallen below the market capitalization range. Because of market movement, there can be no assurance that the securities held by the Fund will stay within the given market capitalization range. As a result, the Fund may be exposed to additional risk or investors may not be given the opportunity to invest fully in a certain market capitalization range.

MARKET RISK. Market risk is the risk that a particular security owned or shares of the Fund in general may fall in value. Securities are subject to market fluctuations caused by such factors as economic, political, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments.

REAL ESTATE COMPANIES RISK. The Fund invests in companies in the real estate industry, including REITs. Therefore, the Fund is subject to the risks associated with investing in real estate companies, which may include, but are not limited to, fluctuations in the value of underlying properties; defaults by borrowers or tenants; market saturation; changes in general and local economic conditions; decreases in market rates for rents; increases in competition, property taxes, capital expenditures or operating expenses; and other economic, political or regulatory occurrences affecting companies in the real estate industry.

REIT INVESTMENT RISK. Because the Fund invests in REITs, the Fund is subject to the risks associated with investing in real estate, which may include, but are not limited to, fluctuations in the value of underlying properties, defaults by borrowers or tenants, market saturation, changes in general and local operating expenses, and other economic, political or regulatory occurrences affecting companies in the real estate industry. In addition to risks related to investments in real estate generally, investing in REITs involves certain other risks related to their structure and focus, which include, but are not limited to, dependency upon management skills, limited diversification, the risks of locating and managing financing for projects, heavy cash flow dependency, possible default by borrowers, the costs and potential losses of self-liquidation of one or more holdings, the risk of a possible lack of mortgage funds and associated interest rate risks, overbuilding, property vacancies, increases in property taxes and operating expenses, changes in zoning laws, losses due to environmental damages, changes in neighborhood values and appeal to purchasers, the possibility of failing to maintain exemptions from registration under the Investment Company Act of 1940 and, in many cases, relatively small market capitalization, which may result in less market liquidity and greater price volatility. REITs are also subject to the risk that the real estate market may experience an economic downturn generally, which may have a material effect on the real estate in which the REITs invest and their underlying portfolio securities.

SMALL CAP RISK. The Fund invests in Small-Cap Companies. Such companies may be more vulnerable to adverse general market or economic developments, and their securities may be less liquid and may experience greater price volatility than larger, more established companies as a result of several factors, including limited trading volumes, products or financial resources, management inexperience and dependence on a few key people, and less publicly available information. Accordingly, such companies are generally subject to greater market risk than larger, more established companies. The market movements of equity securities issued by issuers with smaller capitalizations may be more abrupt or erratic than the market movements of equity securities of larger, more established companies or the stock market in general. Historically, smaller capitalization companies have sometimes gone through extended periods when they did not perform as well as larger companies. In addition, equity securities of Small-Cap Companies may be less liquid than those of larger companies.

SMALL FUND RISK. The Fund currently has fewer assets than larger funds, and like other smaller funds, large inflows and outflows may impact the Fund's market exposure for limited periods of time. This impact may be positive or negative, depending on the direction of market movement during the period affected.

VALUE INVESTING RISK. The Fund focuses its investments on securities that the portfolio managers believe are undervalued or inexpensive relative to other investments. These types of securities may present risks in addition to the general risks associated with investing in them. These securities generally are selected on the basis of an issuer's business and economic fundamentals or the securities' current and projected credit profiles, relative to current market price. Such securities are subject to the risk of misestimating certain fundamental factors. Disciplined adherence to a "value" investment mandate during periods in which that style is "out of favor" can result in significant underperformance relative to overall market indices and other managed investment vehicles that pursue growth style investments and/or flexible style mandates.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value
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 and the Internal Revenue Code. First Trust has no knowledge of and has not been provided any information regarding any investor. Financial advisors must determine whether particular investments are appropriate for their clients. First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks independently and is responsible for exercising independent judgment with respect to its retirement plan clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
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