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Jeff Margolin
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  First Trust Green Energy ETF Primer
Posted Under: ETFs
As fossil fuels continue to lose market share to renewable energy for power generation, investors have grown more interested in green and renewable energy exchange-traded funds (ETFs). For additional commentary on renewable energy, see our recent newsletter titled, What's Fueling the Rise in Green Energy ETFs?  Below, we provide a brief overview of the methodologies and exposures of three First Trust ETFs focused on the green energy investment theme.

The First Trust NASDAQ® Clean Edge® Green Energy Index Fund (QCLN) tracks US-listed companies that derive the majority of their revenue from clean energy and low carbon activities. The First Trust Global Wind Energy ETF (FAN) is a targeted approach to companies involved in the wind energy industry. The First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID) is made up of companies in the grid and electric energy infrastructure sector, including companies that are primarily engaged and involved in electric grid, electric meters and devices, networks, energy storage and management, and enabling software used by the smart grid infrastructure sector.

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Posted on Tuesday, November 10, 2020 @ 7:49 AM • Post Link Share: 
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  Asset Flows Monitor November 2020 Edition
Posted Under: ETFs

 
Asset Flows Monitor November 2020 Edition
  • US-listed ETFs had $33.5 billion in net inflows in October, bringing trailing 12-month net inflows to $416.6 billion.  Total ETF assets under management now stand at $4.68 trillion.
  • Fixed income ETFs had the strongest net inflows in October (+$21.6 billion), bringing trailing 12-month net inflows to $199.8 billion.
  • Equity ETFs had $12.0 billion in net inflows in October, bringing trailing 12-month net inflows to $172.0 billion.
  • Commodities ETFs had $0.4 billion in net outflows in October—marking the category's first month of net outflows in 2020—bringing trailing 12-month net inflows to $43.7 billion. 

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Posted on Wednesday, November 4, 2020 @ 1:46 PM • Post Link Share: 
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  Alternatives Update 3rd Quarter 2020
Posted Under: Alternatives
The third quarter of 2020 was a continuation of multiple trends from the second quarter: strong capital market returns, continued injections of liquidity from global central banks, supportive rhetoric and action from the Federal Reserve (the "FED"), calls for more fiscal stimulus and generally positive economic and sentiment data.  The economic recovery looked to be more  "K-shaped" in which part of the economy has done reasonably well and part of the economy saw no improvement or declined, thus prompting calls for targeting lower income levels in the next round of fiscal assistance. The U.S. federal budget deficit for the fiscal year ending 2021 is projected to be over $3 trillion with total debt exceeding the entire U.S. GDP.  Neither side of the political aisle seems particularly concerned about this and so the grand Modern Monetary Theory (MMT) experiment continues.  Special purpose acquisition companies (SPAC) or "blank check companies" continued to have a moment as several came to market with investors in a quasi-frenzy to give them funding, while technology and growth dominated style returns in the zero interest-rate policy (ZIRP) environment.  

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Posted on Thursday, October 29, 2020 @ 10:04 AM • Post Link Share: 
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  Closed-end Fund Review - Third Quarter 2020
Posted Under: CEFs
THIRD QUARTER 2020 OVERVIEW
Building on the 15.04% positive total returns earned during the second quarter of 2020, closed-end funds (CEFs) continued their positive momentum during the third quarter. Indeed, the average CEF was positive by 3.27% during the third quarter. Despite two solid back-to-back quarters for CEFs, the average CEF remains lower by 9.00% year-to-date (YTD). (Source: Morningstar. All performance is based on share price total return) While the average CEF remains lower for the year, it is important not to lose sight of the remarkable rally many CEFs have staged since the third week of March. To that end, the First Trust Composite Closed-end Fund Total Return Index (UPCEFT) is up 48.20% from 3/18/20 to 9/30/20 (Source: Bloomberg).

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Posted on Monday, October 26, 2020 @ 9:45 AM • Post Link Share: 
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  What’s Fueling the Rise in Green Energy ETFs?
Posted Under: ETFs
Green and renewable energy ETFs have performed exceptionally well this year, with the majority of outperformance coming after the close of May.  At a base case level, we believe that investor sentiment toward this investment theme may be reflecting the shifting outlook (a Biden win) for the upcoming US elections, which could have a significant impact on the industry.  Beyond November's election results, we expect the US—along with other countries—to enact sizeable fiscal stimulus that targets green energy projects.  Over the long-term, favorable changes in public opinion and economic fundamentals are likely to benefit the industry, as costs relative to traditional energy sources have declined dramatically.  In our view, these developments may help fuel robust performance for the green and renewable energy theme in the years ahead.

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Posted on Friday, October 16, 2020 @ 9:23 AM • Post Link Share: 
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  Asset Flows Monitor October 2020 Edition
Posted Under: ETFs

 
Asset Flows Monitor October 2020 Edition 
 
  • US-listed ETFs had $33.5 billion in net inflows in September, bringing trailing 12-month net inflows to $416.3 billion.  Total ETF assets under management now stand at $4.67 trillion.
  • Equity ETFs had the strongest net inflows in September (+$19.0 billion), bringing trailing 12-month net inflows to $176.9 billion.
  • Fixed income ETFs had $12.5 billion in net inflows in September, bringing trailing 12-month net inflows to $194.1 billion.
  • Commodities ETFs had $1.4 billion in net inflows in September—marking the ninth consecutive month of net inflows—bringing trailing 12-month net inflows to $44.3 billion.

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Posted on Monday, October 5, 2020 @ 11:29 AM • Post Link Share: 
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  Asset Flows Monitor September 2020 Edition
Posted Under: ETFs

 
  • US-listed ETFs had $31.0 billion in net inflows in August, bringing trailing 12-month net inflows to $429.7 billion.  Total ETF assets under management increased to $4.81 trillion.

  • Among US-listed ETFs, fixed income ETFs had the strongest net inflows in August (+$16.1 billion), bringing trailing 12-month net inflows to $196.0 billion.

  • Flows into equity ETFs totaled $10.9 billion in August, bringing trailing 12-month net inflows to $186.8 billion.

  • Commodities ETFs had net inflows in August (+$3.2 billion) for the eighth month in a row, bringing trailing 12-month net inflows to $45.8 billion.

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Posted on Thursday, September 10, 2020 @ 9:02 AM • Post Link Share: 
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  How Have Presidential Elections Impacted Biotechnology Stocks?
Posted Under: ETFs

 
Biotechnology stocks had a stellar start to 2020, showing great resilience as investors pinned their hopes on the industry to produce new COVID-19 vaccines and therapeutics.  As we discussed earlier this year, the pandemic may also bring about important long-term benefits for the industry, including more efficient regulation, increased mergers and acquisitions (M&A) activity, and an improved public image.

However, since peaking on July 20th, the NYSE Arca Biotechnology Index has declined by 12.7%, while the S&P 500 Index has advanced by 8.7% (through 9/1/20).  While there are many possible explanations for biotech's recent underperformance, I believe one important factor is the upcoming presidential election.  Rising health care costs in the U.S. have been a go-to wedge issue for Democratic party candidates in election campaigns, especially over the past two decades (Affordable Care Act passed in 2010).  But if history repeats, this pullback may represent an attractive buying opportunity.

During the last four presidential elections (2004, 2008, 2012, and 2016), biotechnology stocks performed poorly heading into election day. On average, the NYSE Arca Biotechnology Index had a -6.4% return during the prior 2 months (see chart above).  However, biotech stocks also rebounded nicely following these elections, regardless of which candidate was elected.  While Democratic and Republican presidential candidates split these four elections evenly, the average return 2 months after election day was 4.8%, and the average return 12 months after election day was 34.5%.

The link between biotech stocks and politics is nothing new, and recent weakness substantiates that point.  But investors that can look past election day—or take advantage of weakness leading up to it—may be rewarded.

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Posted on Friday, September 4, 2020 @ 8:24 AM • Post Link Share: 
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  Asset Flows Monitor August 2020 Edition
Posted Under: ETFs

 
  • US-listed ETFs had $49.3 billion in net inflows in July, bringing trailing 12-month net inflows to $392.0 billion.  Total ETF assets under management increased to $4.55 trillion.
  • Among US-listed ETFs, fixed income ETFs had the strongest net inflows in July (+$29.7 billion), bringing trailing 12-month net inflows to $191.9 billion.  Fixed income ETF assets surpassed the $1 trillion mark for the first time ever in July.
  • Flows into equity ETFs totaled $11.1 billion in July, bringing trailing 12-month net inflows to $153.3 billion.
  • Commodities ETFs had net inflows in July (+$7.8 billion) for the seventh month in a row, bringing trailing 12-month net inflows to $46.5 billion.

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Posted on Wednesday, August 5, 2020 @ 9:47 AM • Post Link Share: 
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  Factors Align For Post-Pandemic 5G Growth
Posted Under: ETFs
In 2020, digital networks have been a lifeline, facilitating numerous aspects of daily life. Many of the innovations that we have come to rely upon—including high quality video conferencing, telemedicine, meal delivery apps, and many others—have emerged within just the last few years. As we look forward to the next wave of innovation that may improve our quality of life and enhance productivity, we believe the transition to 5G mobile networks may play a pivotal role. In our view, this transition may also provide an attractive opportunity for investors over the next several years, as new devices utilizing 5G technology are introduced, and the build-out of 5G infrastructure is accelerated by fiscal stimulus spending and geopolitical tensions.

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Posted on Wednesday, August 5, 2020 @ 7:58 AM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 PREVIOUS POSTS
Alternatives Update 2nd Quarter 2020
Navigating a Pandemic with Thematic ETFs
Asset Flows Monitor July 2020 Edition
High-Yield Bond Performance as Spreads Recover
The Post-Pandemic Opportunity for Biotech
Asset Flows Monitor June 2020 Edition
As Dividends Become Scarcer, Will they Become More Valued?
Asset Flows Monitor May 2020 Edition
Alternatives Update 1st Quarter 2020
Closed-end Fund Review - First Quarter 2020
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