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First Trust Municipal CEF Income Opportunity ETF (MCEF)
Investment Objective/Strategy - The First Trust Municipal CEF Income Opportunity ETF is an actively managed exchange-traded fund. The Fund's investment objective is to provide current income. Under normal market conditions, the Fund will seek to achieve its investment objectives by investing at least 80% of its net assets (including investment borrowings) in a portfolio of closed-end investment companies that are listed and traded in the United States on registered exchanges (“Closed-End Funds”) which invest primarily in municipal debt securities some or all of which pay interest that is exempt from regular federal income taxes (collectively, “Municipal Securities”).
There can be no assurance that the Fund's investment objectives will be achieved.
Fund Overview
Fund TypeTax-Free Fixed Income
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBank of New York Mellon
Fiscal Year-End08/31
Inception Price$20.05
Inception NAV$20.05
Fees And Expenses
Management Fees0.75%
Acquired Fund Fees and Expenses1.90%
Total Annual Expenses2.65%
Current Fund Data (as of 5/12/2021)
Closing NAV1$20.66
Closing Market Price2$20.67
Bid/Ask Midpoint$20.69
Bid/Ask Premium0.15%
30-Day Median Bid/Ask Spread30.58%
Total Net Assets$11,365,645
Outstanding Shares550,002
Daily Volume12,755
Average 30-Day Daily Volume5,522
Closing Market Price 52-Week High/Low$20.98 / $17.45
Closing NAV 52-Week High/Low$21.03 / $17.47
Number of Holdings (excluding cash)37
Top Holdings (as of 5/12/2021)*
Holding Percent
Nuveen AMT-Free Municipal Credit Income Fund 5.02%
Nuveen AMT-Free Quality Municipal Income Fund 4.98%
Nuveen Quality Municipal Income Fund 4.52%
BlackRock Muni Intermediate Duration Fund, Inc. 4.01%
BlackRock MuniYield Quality Fund III, Inc. 4.00%
Invesco Quality Municipal Income Trust 3.99%
BlackRock MuniYield Quality Fund, Inc. 3.87%
BlackRock MuniHoldings Fund, Inc. 3.55%
Nuveen Municipal Credit Opportunities Fund 3.54%
Nuveen Municipal Credit Income Fund 3.45%

* Excluding cash.  Holdings are subject to change.

Top State Exposure (as of 4/30/2021)
State Percent
Illinois 11.64%
New York 9.29%
California 9.04%
Texas 7.86%
New Jersey 7.33%
Fund Composition (as of 4/30/2021)
CEF 95.46%
ETF 2.76%
Cash 1.78%
NAV History (Since Inception)
Past performance is not indicative of future results.
Overall Morningstar RatingTM (as of 4/30/2021)4

Among 144 funds in the Muni National Long category. This fund was rated 5 stars/144 funds (3 years) based on risk adjusted returns.
Distribution Information
Dividend per Share Amt (as of 5/13/2021)5$0.0625
30-Day SEC Yield (as of 4/30/2021)63.59%
Taxable Equivalent 30-Day SEC Yield (as of 4/30/2021)76.06%
12-Month Distribution Rate (as of 4/30/2021)83.40%
Distribution Rate (as of 4/30/2021)93.62%
Taxable Equivalent Annualized Distribution Rate (as of 4/30/2021)106.12%
For funds with certain equity strategies, due to the negative economic impact across many industries caused by the COVID-19 outbreak, certain of the issuers of the securities included in the fund may elect to reduce the amount of dividends and/or distributions paid in the future. As a result, the "12-Month Distribution Rate," which is based on the fund's trailing 12-month ordinary distributions, will likely be higher, and in some cases significantly higher, than the actual 12-month distribution rate achieved by the fund.
Fund Characteristics (as of 4/30/2021)
Weighted Average Option-Adjusted Duration116.02 Years
Weighted Average Leverage Option-Adjusted Duration129.16 Years
Weighted Average Effective Maturity7.22 Years
Weighted Average Leverage1332.55%
Weighted Average Premium/Discount14-2.24%
Credit Quality (as of 4/30/2021)
Credit Quality Percent
AAA 7.72%
AA 25.71%
A 24.56%
BBB 18.16%
BB 6.57%
B 2.32%
CCC-D 1.04%
N/R 13.92%
The ratings are by Standard & Poor's except where otherwise indicated. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations except for those debt obligations that are only privately rated. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest). Investment grade is defined as those issuers that have a long-term credit rating of BBB- or higher. "NR" indicates no rating. The credit ratings shown relate to the creditworthiness of the issuers of the underlying securities in the Fund, and not to the Fund or its shares. Credit ratings are subject to change.
Bid/Ask Premium/Discount (as of 5/12/2021)
  2020 Q1 2021 Q2 2021 Q3 2021
Days Traded at Premium 165 53 23 ---
Days Traded at Discount 88 8 6 ---
Weighted Avg Premium/Discount14
Current Weighted Average Premium Discount Information (as of 5/12/2021)
52-Week Average-4.58%
52-Week High-1.54%
52-Week Low-8.44%
Top Sector Exposure (as of 4/30/2021)
National Municipal Leveraged 77.47%
Term Fund 9.83%
National Municipal Non-Leveraged 4.14%
National Municipal High Yield 3.08%
National Municipal ETF 2.76%
Cash 1.78%
Hypothetical Growth of $10,000 Since Inception (as of 5/12/2021) *

Month End Performance (as of 4/30/2021)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund Performance *
Net Asset Value (NAV) 2.41% 3.59% 23.52% 8.88% N/A N/A 4.28%
After Tax Held 2.03% 3.07% 21.73% 7.40% N/A N/A 2.77%
After Tax Sold 1.42% 2.12% 13.85% 6.18% N/A N/A 2.57%
Market Price 2.31% 3.48% 23.72% 8.87% N/A N/A 4.28%
Index Performance **
Bloomberg Barclays Municipal Bond Index -0.15% 0.48% 7.75% 5.33% N/A N/A 3.46%
First Trust Municipal Closed-End Fund Total Return Index 2.42% 3.60% 24.83% 10.03% N/A N/A 4.96%
Quarter End Performance (as of 3/31/2021)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund Performance *
Net Asset Value (NAV) 1.48% 1.48% 17.17% 8.12% N/A N/A 3.88%
After Tax Held 1.10% 1.10% 15.48% 6.65% N/A N/A 2.38%
After Tax Sold 0.87% 0.87% 10.10% 5.60% N/A N/A 2.27%
Market Price 1.38% 1.38% 17.03% 8.10% N/A N/A 3.89%
Index Performance **
Bloomberg Barclays Municipal Bond Index -0.35% -0.35% 5.51% 4.91% N/A N/A 3.33%
First Trust Municipal Closed-End Fund Total Return Index 1.56% 1.56% 17.58% 9.29% N/A N/A 4.59%
3-Year Statistics (as of 4/30/2021)
  Standard Deviation Alpha Beta Sharpe Ratio Correlation
MCEF 8.87% -0.26 0.90 0.83 0.99
Bloomberg Barclays Municipal Bond Index 4.04% 0.70 0.36 0.94 0.87
First Trust Municipal Closed-End Fund Total Return Index 9.83% --- 1.00 0.87 1.00
Standard Deviation is a measure of price variability (risk). Alpha is an indication of how much an investment outperforms or underperforms on a risk-adjusted basis relative to its benchmark.Beta is a measure of price variability relative to the market. Sharpe Ratio is a measure of excess reward per unit of volatility. Correlation is a measure of the similarity of performance.

*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.

After Tax Held returns represent return after taxes on distributions. Assumes shares have not been sold. After Tax Sold returns represent the return after taxes on distributions and the sale of fund shares. Returns do not represent the returns you would receive if you traded shares at other times. Market Price returns are determined by using the midpoint of the national best bid offer price ("NBBO") as of the time that the fund's NAV is calculated. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative.

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

**Indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. Indexes are unmanaged and an investor cannot invest directly in an index.

Prior to August 2019, the fund's benchmark was the Morningstar US National & High Yield Municipal CEF Index. The prior benchmark is no longer shown because the Morningstar Index used was closed in August 2019.

Bloomberg Barclays Municipal Bond Index - The Index is a rules-based, market-value-weighted index engineered for the long-term tax-exempt bond market.

First Trust Municipal Closed-End Fund Total Return Index - The Index is a cap weighted index (based on NAV) designed to provide a broad representation of the national municipal closed-end fund universe. Funds included in the index trade on an U.S. Stock Exchange and have a market cap of at least $100 million.

1 The NAV represents the fund's net assets (assets less liabilities) divided by the fund's outstanding shares .
2 Fund shares are purchased and sold on an exchange at their market price rather than net asset value (NAV), which may cause the shares to trade at a price greater than NAV (premium) or less than NAV (discount).
3 The median bid-ask spread is calculated by identifying the national best bid and national best offer ("NBBO") for the fund as of the end of each 10 second interval during each trading day of the last 30 calendar days and dividing the difference between each such bid and offer by the midpoint of the NBBO. The median of those values is identified and that value is expressed as a percentage rounded to the nearest hundredth.
The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
5 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.
6 The 30-day SEC yield is calculated by dividing the net investment income per share earned during the most recent 30-day period by the maximum offering price per share on the last day of the period and includes the effects of fee waivers and expense reimbursements, if applicable.
7 The taxable equivalent yield is for illustrative purposes only. This information illustrates approximately what you would have to earn on taxable investments to equal the tax-exempt yield using the highest federal tax bracket and Medicare tax for 2021. This information is based on present law as of the date of publication and does not account for any proposed changes in tax rates. This information does not account for limitations on deductions, the alternative minimum tax or taxes other than Federal personal income tax and Medicare tax.
8 12-Month Distribution Rate is calculated by dividing the sum of the fund's trailing 12-month ordinary distributions paid or declared by the NAV price. Distribution rates may vary.
9 Distribution Rate is calculated by dividing the fund's most recent ordinary distribution paid or declared, on an annualized basis, by the NAV price. Distribution rates may vary.
10 The taxable equivalent annualized distribution rate is for illustrative purposes only. This information illustrates approximately what you would have to earn on taxable investments to equal the tax-exempt annualized distribution rate using the highest federal tax bracket and Medicare tax for 2021. This information is based on present law as of the date of publication and does not account for any proposed changes in tax rates. This information does not account for limitations on deductions, the alternative minimum tax or taxes other than Federal personal income tax and Medicare tax.
11 A measure of a bond's sensitivity to interest rate changes that reflects the change in a bond's price given a change in yield and is adjusted for option provisions.
12 A measure of a bond's sensitivity to interest rate changes that reflects the change in a bond's price given a change in yield that is adjusted for option provisions and the leveraging process.
13 The use of various financial instruments or borrowed capital to increase the potential return of an investment.
14 A premium occurs when an underlying fund's market price is higher than its NAV, and a discount occurs when an underlying fund's market price is lower than its NAV.
15 Inception Date is 9/27/2016

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.

ETF Characteristics

The fund lists and principally trades its shares on The Nasdaq Stock Market LLC.

Investors buying or selling fund shares on the secondary market may incur customary brokerage commissions. Market prices may differ to some degree from the net asset value of the shares. Investors who sell fund shares may receive less than the share's net asset value. Shares may be sold throughout the day on the exchange through any brokerage account. However, unlike mutual funds, shares may only be redeemed directly from the fund by authorized participants, in very large creation/redemption units. If the fund's authorized participants are unable to proceed with creation/redemption orders and no other authorized participant is able to step forward to create or redeem, fund shares may trade at a discount to the fund's net asset value and possibly face delisting.

Risk Considerations

The fund's shares will change in value and you could lose money by investing in the fund. The fund is subject to management risk because the advisor will apply investment techniques and risk analyses that may not have the desired result. There can be no assurance that the fund's investment objectives will be achieved.

The fund is subject to market risk. Market risk is the risk that a particular security owned by the fund or shares of the fund in general may fall in value. The outbreak of the respiratory disease designated as COVID-19 in December 2019 has caused significant volatility and declines in global financial markets, which have caused losses for investors. The COVID-19 pandemic may last for an extended period of time, and will continue to impact the economy for the foreseeable future.

Municipal Securities may be adversely affected by local political and economic conditions and developments. Municipal securities issuers may be unable to pay their obligations as they come due. Income from municipal bonds could be declared taxable because of, among other things, unfavorable changes in tax laws, adverse interpretations by the Internal Revenue Service or state tax authorities, or noncompliant conduct of a bond issuer. All or a portion of the fund's otherwise exempt-interest dividends may be taxable to those shareholders subject to the federal alternative minimum tax.

High yield securities, or "junk" bonds, are subject to greater market fluctuations and risk of loss than securities with higher ratings, and therefore, may be highly speculative. The market for high yield securities is smaller and less liquid than that for investment grade securities. Distressed Municipal Securities are speculative and involve substantial risks. Lower-quality debt tends to be less liquid than higher-quality debt.

Participation interests in municipal leases pose special risks because many leases and contracts contain "non-appropriation" clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for this purpose by the appropriate legislative body.

Because the shares of CEFs cannot be redeemed upon demand, shares of many CEFs will trade on exchanges at market prices rather than net asset value, which may cause the shares to trade at a price greater than NAV (premium) or less than NAV (discount). There can be no assurance that the market discount on shares of any CEF purchased by the fund will ever decrease or that when the fund seeks to sell shares of a CEF it can receive the NAV for those shares. The fund may also be exposed to higher volatility in the market due to indirect use of leverage through its investment in CEFs. CEFs may issue senior securities in an attempt to enhance returns.

The use of derivatives can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives. If a counterparty defaults on its payment obligations, the fund will lose money and the value of fund shares may decrease.

Municipal bonds are subject to numerous additional risks, including credit risk, income risk, interest rate risk, call risk, and zero coupon bond risk. Credit risk is the risk that an issuer of a security will be unable or unwilling to make dividend, interest and/or principal payments when due and that the value of a security may decline as a result. Income risk is the risk that income from fixed income investments could decline during periods of falling interest rates. Interest rate risk is the risk that the value of the securities in the fund will decline because of rising market interest rates. Call risk is the risk that performance could be adversely impacted if an issuer calls higher-yielding debt instruments. Zero coupon bond risk is the risk that zero coupon bonds may be highly volatile as interest rates rise or fall because they do not pay interest on a current basis.

The risks of owning an ETF generally reflect the risks of owning the underlying securities, although lack of liquidity in an ETF could result in it being more volatile and ETFs have management fees that increase their costs.

An underlying fund may invest in inverse floating rate securities which create effective leverage and thus, the value of the inverse floater will increase and decrease to a significantly greater extent. Custodial receipt trusts may issue inverse floater securities and if an underlying fund were to hold inverse floaters issued by custodial receipt trusts, the underlying fund would be subject to the risks of inverse floaters.

The fund may, under most circumstances, effect a significant portion of creations and redemptions for cash, rather than in-kind securities. As a result, the fund may be less tax-efficient.

The fund currently has fewer assets than larger funds, and like other relatively new funds, large inflows and outflows may impact the fund's market exposure for limited periods of time.

The fund's investment in CEFs is restricted by the Investment Company Act of 1940 and the fund's associated exemptive relief which limits the amount of any single CEF that can be owned by the fund.

To the extent a fund invests in floating or variable rate obligations that use the London Interbank Offered Rate (“LIBOR”) as a reference interest rate, it is subject to LIBOR Risk. The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, will cease making LIBOR available as a reference rate over a phase-out period that will begin immediately after December 31, 2021. The unavailability or replacement of LIBOR may affect the value, liquidity or return on certain fund investments and may result in costs incurred in connection with closing out positions and entering into new trades. Any potential effects of the transition away from LIBOR on the fund or on certain instruments in which the fund invests can be difficult to ascertain, and they may vary depending on a variety of factors, and they could result in losses to the fund.

First Trust Advisors L.P. is the adviser to the fund. First Trust Advisors L.P. is an affiliate of First Trust Portfolios L.P., the fund's distributor.

©2021 Morningstar, Inc. All Rights Reserved. The Morningstar RatingTM information contained herein: (1) is proprietary to Morningstar;(2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

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, 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.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
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