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American Agenda, Series 18

The United States presidential election occurred November 3rd, leaving investors to wonder what it will mean for their portfolios. While most voters focus on the current state of affairs when casting their ballots in presidential elections, equity investors tend to concentrate on the impact the election will have on fiscal and monetary policy that can influence future economic growth. Historically, in the first year of a new president’s term, the S&P 500 Index is up 9.4% on average.1

The outcome of the presidential election can have an impact on different sectors and industries. Our analysts at First Trust have identified certain areas of the market listed below that we believe may offer strong relative value and growth potential after a Democratic victory.

  • Clean Energy | Clean energy is developed from renewable, zero-emissions sources, as well as energy that is stored through energy efficiency measures. As opposed to coal and oil, clean energy does not pollute the atmosphere. The clean energy industry generates hundreds of billions in economic activity and is anticipated to grow rapidly in the coming years.2 The potential for economic opportunity may exist for companies that invent, manufacture and export clean energy technologies.
  • Consumer Discretionary | This sector felt the impact of the pandemic as people cancelled trips and avoided leisure activities. The sector is dominated by companies that produce products and services that consumers often do without when they are under financial stress or worried about the state of the economy. Prior to the COVID-19 pandemic, the U.S. labor market was strong with healthy consumer balance sheets which may help this sector going forward.
  • Health Care | President Biden is planning to make a renewed commitment to protect and expand Americans’ access to quality, affordable health care. He will build on the Affordable Care Act to meet the health care needs created by the pandemic, reduce health care costs, and make our health care system less complex to navigate.3 From 2019-2028, it is projected that health care spending will grow at an average rate of 5.4% annually.4 In addition, there are currently approximately 8,000 medicines in clinical development around the world. Of these, 74% have the potential to be first-in-class treatments, which represents an entirely new approach to treating a disease.5
  • Information Technology | Gartner forecasts worldwide IT spending to total approximately $3.8 trillion in 2021, an increase of 4% from 2020. In addition, the worldwide public cloud services market is anticipated to grow 18% in 2021 to total $304.9 billion, up from $257.5 billion in 2020. By 2022, Gartner predicts that worldwide public cloud service revenue will potentially reach $362.3 billion.
  • Internet | As of 12/31/20, over 5 billion people or 64.2% of the worldwide population had access to the Internet, an increase of 1,300% since 2000.6 In addition, over the last few years, e-commerce has become an indispensable part of the global retail framework. As Internet access and adoption are rapidly increasing worldwide, the number of digital buyers should continue to increase.7
  • U.S. Companies with China Exposure | American businesses operating in China believe that U.S. President Joe Biden’s administration may help stabilize relations between the world’s two largest economies.8
  • U.S. Infrastructure | Infrastructure is the foundation that connects U.S. businesses and enables communities to prosper. For decades, the U.S. has been under-investing in our infrastructure. To close the nearly $2.6 trillion 10-year investment gap, meet future need, and restore our global competitive advantage, the U.S. must increase investment from all levels of government and the private sector from approximately 2.5% to 3.5% of U.S. Gross Domestic Product by 2025.9

1 Morningstar (Ibbotson Stocks, Bonds, Bills, and Inflation).Past performance is no guarantee of future results.
2 U.S. Department of Energy
3 Whitehouse.gov
4 CMS.gov
6 Internet World Stats
7 Statista
8 Fortune
9 American Society of Civil Engineers

Portfolio Objective

This unit investment trust seeks above-average capital appreciation; however, there is no assurance the objective will be met.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value

You should consider the portfolio's investment objectives, risks, and charges and expenses carefully before investing. Contact your financial professional or call First Trust Portfolios, L.P. at 1.800.621.1675 to request a prospectus, which contains this and other information about the portfolio. Read it carefully before you invest.

Risk Considerations

An investment in this unmanaged unit investment trust should be made with an understanding of the risks involved with owning common stocks, such as an economic recession and the possible deterioration of either the financial condition of the issuers of the equity securities or the general condition of the stock market.

You should be aware that the portfolio is concentrated in stocks in both the consumer discretionary and information technology sectors which involves additional risks, including limited diversification. The companies engaged in the consumer discretionary sector are subject to global competition, changing government regulations and trade policies, currency fluctuations, and the financial and political risks inherent in producing products for foreign markets. The companies engaged in the information technology sector are subject to fierce competition, high research and development costs, and their products and services may be subject to rapid obsolescence. Technology company stocks, especially those which are Internet-related, may experience extreme price and volume fluctuations that are often unrelated to their operating performance.

An investment in a portfolio containing small-cap and mid-cap companies is subject to additional risks, as the share prices of small-cap companies and certain mid-cap companies are often more volatile than those of larger companies due to several factors, including limited trading volumes, products, financial resources, management inexperience and less publicly available information.

Large capitalization companies may grow at a slower rate than the overall market.

This UIT is a buy and hold strategy and investors should consider their ability to hold the trust until maturity. There may be tax consequences unless units are purchased in an IRA or other qualified plan.

As the use of Internet technology has become more prevalent in the course of business, the trust has become more susceptible to potential operational risks through breaches in cybersecurity.

The COVID-19 global pandemic has resulted in major disruptions to economies and markets around the world. Financial markets have experienced extreme volatility and severe losses, negatively impacting global economic growth prospects. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty and may exacerbate other political, social and economic risks.

The value of the securities held by the trust may be subject to steep declines or increased volatility due to changes in performance or perception of the issuers.

The information in the prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
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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, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
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