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Jeff Margolin
Closed-End Fund Analyst
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  Rising Demand for Electric Vehicles Highlights the Need for Investments in the Power Grid: Which ETFs May Benefit?
Posted Under: ETFs
The outlook for electric vehicles (EVs) has strengthened recently, supported by decreasing costs for advanced battery technology and increasing support from automakers, politicians, and consumers.  In our view, a shift to EVs over the next decade may boost electricity consumption and contribute to the need for massive investments in electrical infrastructure around the world.  This may benefit companies involved in both the build out and management of those assets.

What's Driving Growth for Electric Vehicles?
While a potential transition to electric vehicles is not without hurdles, public policy around the world has grown increasingly supportive.  In the US, President Joe Biden signed an executive order on August 5, 2021, calling for 50% of new passenger vehicles sold in the US to be zero-emission electric vehicles by 2030.1 For context, EVs represented just 2% of US auto sales in 2020.2 While this order is not legally binding, executives from several automakers joined the President in announcing their own goals of having EVs represent 40-50% of annual US sales volume by 2030.3

1 WhiteHouse.gov, Executive Order on Strengthening American Leadership in Clean Cars and Trucks, 8/5/21.
2 International Energy Agency, Global EV Outlook 2020.
3 Reuters, Biden seeks to make half of new U.S. auto fleet electric by 2030, 8/5/21.

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Posted on Friday, September 17, 2021 @ 3:42 PM • Post Link Share: 
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  Asset Flows Monitor September 2021 Edition
Posted Under: ETFs

 
Asset Flows Monitor September 2021 Edition

  • Net inflows for US-listed ETFs totaled $68.0 billion in August, bringing total ETF assets under management to $6.74 trillion, another new all-time month-end high water mark.
  • Equity ETFs had net inflows totaling $49.5 billion in August, bringing trailing 12-months (TTM) net inflows to $583.3 billion.
  • Fixed income ETFs had net inflows totaling $19.4 billion in August, bringing TTM net inflows to $208.4 billion.
  • Commodities ETFs had net outflows totaling $2.0 billion in August, bringing TTM net outflows to $8.2 billion.  Precious metals ETFs (-$1.9 billion in August; -$12.8 billion TTM) and energy ETFs (-$0.1 billion in August; -$3.7 billion TTM) were the largest negative contributors in both periods, while broad commodities ETFs (+$0.1 in August; +$7.8 billion TTM) were the largest positive contributor.

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Posted on Friday, September 3, 2021 @ 1:32 PM • Post Link Share: 
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  Near-term Catalysts May Provide Opportunity in Water
Posted Under: ETFs
Infrastructure-related ETFs have been one of the most popular thematic categories to emerge in 2021, as year-to-date net inflows reached $4.2 billion in June (as of 6/30/21).  As investors seek to capitalize on expectations of fiscal stimulus in the US, we believe infrastructure-related themes may gain further momentum in the months ahead.  While there are many different types of "infrastructure" to consider, we find the water theme to be particularly compelling, supported by both long-term trends and potential near-term catalysts.  Moreover, we infer that most investors have only minor exposure to this theme, as the ISE Clean Edge Water Index represents just 1.2% of the Russell 3000® Index's market capitalization (as of 6/30/21).  It is also possible that your average investor may think in terms of water utilities rather than water infrastructure companies with respect to this theme.

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Posted on Monday, August 16, 2021 @ 11:33 AM • Post Link Share: 
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  Alternatives Update 2nd Quarter 2021
Posted Under: Alternatives
The economic reopening of the U.S. economy hit its stride in the second quarter of 2021.   First quarter GDP came in at 6.4%, jobless claims and unemployment trended down, while job openings moved sharply higher.  The capital markets remain in caretaker mode with investors laser-focused, not on earnings, but the Federal Reserve (the "FED") and its intentions regarding any change in policy.  The pandemic continues to remain a serious health issue, and deep political divides remain on everything from the need for continued economic assistance, vaccinations and masks, to the potential seriousness of new variants of COVID-19.  Globally, vaccine access and hence vaccination rates are well behind those in the U.S. which could signal continued supply chain disruptions for much longer than anticipated.  Inflationary pressures seem to be both accelerating and broadening, yet like clockwork, the FED'S balance sheet, now over $8 trillion, and governmental deficits, continue to run at out-sized levels with more spending being proposed. 
The year-over-year Consumer Price Index (CPI) came in at 5.4% for June, which is the highest level in over a decade.  Yet given the much larger percentage increase in energy, many raw materials, housing and transportation costs, much larger numbers may be in store.  As producers face rising material and labor costs, some have resorted to reducing the size of their offering (shrinkflation) in an effort to mask price increases to the consumer.

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Posted on Wednesday, August 4, 2021 @ 10:34 AM • Post Link Share: 
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  Asset Flows Monitor August 2021 Edition
Posted Under: ETFs

 
Asset Flows Monitor August 2021 Edition

  • Net inflows for US-listed ETFs totaled $52.7 billion in July, bringing total ETF assets under management to $6.57 trillion, another new all-time month-end high water mark.
  • Equity ETFs had net inflows totaling $35.8 billion in July, bringing trailing 12-months (TTM) net inflows to $547.0 billion.
  • Fixed income ETFs had net inflows totaling $17.4 billion in July, bringing TTM net inflows to $205.0 billion.
  • Commodities ETFs had net outflows totaling $0.8 billion in July, bringing TTM net outflows to $3.4 billion.  Precious metals ETFs (-$0.6 billion in July; -$8.6 billion TTM) and energy ETFs (-$0.3 billion in July; -$3.6 billion TTM) were the largest negative contributors in both periods, while broad commodities ETFs (+$0.1 in July; +$8.1 billion TTM) were the largest positive contributors.

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Posted on Tuesday, August 3, 2021 @ 2:25 PM • Post Link Share: 
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  Closed-end Fund Review - Second Quarter 2021
Posted Under: CEFs
SECOND QUARTER 2021 OVERVIEW
After a very strong start to the year when the average closed-end fund (CEF) gained 6.42% during the first quarter (https://www.ftportfolios.com/Commentary/Insights/2021/4/22/first-quarter-2021), many CEFs continued the positive momentum in the second quarter with the average CEF rising 7.83%. It was a very broad rally with equity CEFs increasing 10.64%, fixed-income CEFs rising 6.18%, taxable fixed-income CEFs gaining 6.10% and municipal CEFs increasing 6.29%. (Source: Morningstar. All performance is based on share price total return). Equity CEFs benefitted from the 8.55% increase in the S&P 500 Index and the 5.48% rise in the MSCI All-Country World Ex US Index. Fixed-income CEFs benefitted from the strength in several key fixed-income markets. The ICE BofA High-Yield Bond Index gained 2.77% during the second quarter, while the S&P/LSTA Leveraged Loan Index rose 1.47% for the quarter, the ICE BofA Preferreds Index gained 3.06%, while the ICE BofA 7 12 Yr. Municipal Index added 1.35%. (Source: Bloomberg).

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Posted on Thursday, July 15, 2021 @ 10:06 AM • Post Link Share: 
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  FDN Reaches a New Milestone: Lessons Learned Over 15 Years
Posted Under: ETFs
One of First Trust's largest and most popular exchange-traded funds (ETFs), the First Trust Dow Jones Internet Index Fund (FDN), reached its 15th anniversary on June 19, 2021.  Since its launch, FDN has produced an admirable track record, offering investment professionals an attractive investment option for their clients. As we consider other thematic growth opportunities that lie on the horizon, we believe there are important lessons that can be learned by looking back at FDN over the past decade and a half.

Volatility is the price of performance. 
To benefit from FDN's outperformance over the past 15 years, investors had to accept volatility.  Since inception, FDN has had seven drawdowns greater than 20%, according to Bloomberg as of 6/28/21.  On average, that's nearly one every other year.  In other words, most investors had ample opportunities to think they had bought at the wrong time. Volatility may lead many investors to move money out of the market and "sit on the sidelines" until things "calm down." We believe the wiser course of action is to review your plan with your financial professional and from there, decide if any action is indeed necessary. History has shown that those who chose to stay the course were rewarded for their patience more often than not.

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Posted on Thursday, July 8, 2021 @ 8:54 AM • Post Link Share: 
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  Asset Flows Monitor July 2021 Edition
Posted Under: ETFs

 
Asset Flows Monitor July 2021 Edition
  • Net inflows for US-listed ETFs totaled $77.5 billion in June, bringing total ETF assets under management to $6.45 trillion, another new all-time month-end high water mark.
  • Equity ETFs had net inflows totaling $57.3 billion in June, bringing trailing 12-months (TTM) net inflows to $522.0 billion.
  • Fixed income ETFs had net inflows totaling $18.9 billion in June, bringing TTM net inflows to $218.4 billion.
  • Commodities ETFs had net inflows totaling $0.5 billion in June, bringing TTM net inflows to $5.5 billion.  Broad commodities ETFs were the largest positive contributor for both time periods (+$0.7 billion in June; +$8.3 billion TTM), while energy commodities ETFs were the largest negative contributor (-$0.3 billion in June; -$4.4 billion TTM).

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Posted on Tuesday, July 6, 2021 @ 8:58 AM • Post Link Share: 
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  Asset Flows Monitor June 2021 Edition
Posted Under: ETFs

 
Asset Flows Monitor June 2021 Edition
  • Net inflows for US-listed ETFs totaled $75.2 billion in May, bringing total ETF assets under management to $6.28 trillion, another new all-time month-end high water mark.
  • Equity ETFs brought in $51.3 billion in net inflows in May, bringing trailing 12-month net inflows to $486.4 billion.
  • Fixed income ETFs brought in $18.0 billion in net inflows in May, bringing trailing 12-month net inflows to $235.4 billion.
  • Commodities ETFs had $5.5 billion in net inflows in May, bringing trailing 12-month net inflows to $10.7 billion.  Broad commodities ETFs (+$3.2 billion) and precious metals ETFs (+$2.1 billion) accounted for the vast majority of net inflows.
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Posted on Tuesday, June 8, 2021 @ 12:34 PM • Post Link Share: 
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  Diversifying Risk Management with Target Outcome ETFs®– Buffer Series
Posted Under: ETFs
In recent years, the ETF industry has flourished as a proliferation of new strategies has provided investment professionals with a more robust set of tools for managing their clients' wealth.  Factor-based, thematic, and actively managed ETFs have grown rapidly, as investors' appetites have expanded beyond ETFs tracking more traditional benchmarks.  Among the newest generation of ETFs, those employing "buffered" strategies have seen some of the strongest growth in 2021, with year-to-date net inflows accounting for $871 million of the category's $6.6 billion in total assets under management (as of 3/31/21).  As the fastest growing provider of buffered ETFs—known as Target Outcome ETFs® – Buffer Series (Buffer ETFs)—First Trust  believes the popularity of this category is poised to explode in the coming years as investment professionals and their clients grow more familiar with how they work, the potential advantages of employing these strategies within an ETF wrapper, and the role they may play within clients' portfolios.

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Posted on Friday, May 14, 2021 @ 8:06 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.
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