FT Equity Allocation ETF Model, 1st Qtr 2024
Finding the right mix of investments is a key factor to successful investing. Because different investments
often react differently to economic and market changes, diversifying among low-correlated investments,
which generally experience unrelated performance, primarily helps to reduce volatility and also has the
potential to enhance your returns. The FT Equity Allocation ETF Model Portfolio is a unit investment trust
which seeks to provide broad equity diversification by investing approximately 70% in exchange-traded
funds (ETFs) advised by First Trust Advisors L.P., an affiliate of the trust’s sponsor, that invest in common
stocks across various market capitalizations, growth and value styles, sectors and countries. The remaining
30% of the portfolio invests in narrowly focused First Trust® ETFs that invest in common stocks of
companies from several different sectors, countries and/or themes that we believe will outperform the
overall market over the life of the trust. The ETFs included in
the portfolio are selected by the First Trust Advisors Model Investment Committee through a dynamic approach.
Core and Satellite Approach
For decades, investors have implemented asset allocation strategies designed around a core and satellite
approach. This is a strategy of investing in broad based equity asset classes included in 70% of the trust as
described above, which serve as the core investments of the portfolio, and enhancing them with positions
that are concentrated in specific market segments included in 30% of the Trust as described above, which
serve as the satellite investments of the portfolio. The goal of the core and satellite approach is to balance
broad diversification while seeking risk-controlled, enhanced performance. We use this approach to
construct the FT Equity Allocation ETF Model Portfolio.
What is an ETF?
ETFs offer investors the opportunity to buy and sell an entire basket of securities with a single
transaction throughout the trading day. ETFs combine the characteristics of a mutual fund with the
convenience and trading flexibility of stocks. Below is a list of other ETF features.
Diversification | ETFs hold a basket of securities which helps to mitigate single security
risk. It is important to note that diversification does not guarantee a profit or protect against loss.
Transparency | ETF holdings are available daily so investors know what they own.
Tax Efficiency | The ETF structure allows for increased tax efficiency.
Fully Invested | Unlike a traditional mutual fund, ETFs do not need to hold cash in order to
satisfy investor redemptions which allows them to better adhere to their investment objective.
|Not FDIC Insured Not Bank Guaranteed May Lose Value
This unit investment trust seeks above-average capital appreciation by investing in a
diversified portfolio of First Trust® equity ETFs; however, there is no assurance the
objective will be met.
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.
An investment in this unmanaged unit investment trust should be made with an understanding of the risks involved with owning ETFs which invest in common stocks.
ETFs are subject to various risks, including management’s ability to meet the fund’s investment objective, and to manage the fund’s portfolio when the underlying securities are redeemed or sold, during periods of market
turmoil and as investors’ perceptions regarding ETFs or their underlying investments change. Unlike open-end funds, which trade at prices based on a current determination of the fund’s net asset value, ETFs frequently trade
at a discount from their net asset value in the secondary market.
All of the funds invest in common stocks. Common stocks are subject to certain risks, 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.
Securities of non-U.S. issuers are subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting non-U.S. issuers.
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.
In February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, and the United States. The hostilities and sanctions resulting from those hostilities could have a significant impact on certain investments as well as performance.
The ongoing effects of the COVID-19 global pandemic, or the potential impacts of any future public health crisis, may cause significant volatility and uncertainty in global financial markets. While vaccines have been developed, there is no guarantee that vaccines will be effective against future variants of the disease.
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.
It is important to note that an investment can be made in the
underlying funds directly rather than through the trust. These
direct investments can be made without paying the trust’s sales
charge, operating expenses and organizational costs.
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.
For a discussion of additional risks of investing in the trust see
the “Risk Factors” section of the prospectus.