First Trust Advisors has launched a new exchange-traded fund (ETF), the First Trust RiverFront Dynamic Emerging Markets ETF (RFEM).
The fund seeks to provide capital appreciation through exposure to emerging market economies and the opportunities they represent. The ETF is actively managed by RiverFront Investment Group, LLC (“RiverFront”) using their proprietary methodology, which employs a quantitative and qualitative ranking system based on factors that include value, quality and momentum. This is combined with RiverFront’s optimisation process and detailed analysis. Currency hedging and risk management are also integral parts of the active management of this ETF.
Michael Jones, Chairman and Chief Investment Officer of RiverFront and a member of the fund’s portfolio management team, says: “We believe that active management is essential in today’s fast-moving markets, and this ETF offers active management of the underlying equity portfolio and a dynamic approach to currency hedging.”
Chris Konstantinos, RiverFront’s Director of International Portfolio Management and also a member of the fund’s portfolio management team, adds: “We believe that emerging markets currently offer compelling equity valuations. As commodity prices stabilise and China continues its economic transition, the emerging countries that can successfully navigate this environment have meaningful upside potential in the coming years. We believe the wide divergence in political and economic environments across the emerging markets makes a discipline of active management around these opportunities and risks quite compelling.”
RFEM is one of four First Trust ETFs sub-advised by RiverFront including the First Trust RiverFront Dynamic Europe ETF (Nasdaq: RFEU), the First Trust RiverFront Dynamic Asia Pacific ETF (Nasdaq: RFAP), and the First Trust RiverFront Dynamic Developed International ETF (Nasdaq: RFDI). “We believe financial advisors are seeking actively managed ETF portfolios that make greater use of the inherent tax advantages of the ETF structure and traditionally lower cost relative to actively managed mutual funds,” said Mr. Jones. “RiverFront is especially proud to be collaborating with First Trust on these innovative investment solutions.”
“Emerging market equities are dynamic and quickly-evolving, brimming with both opportunities and risks. We believe this actively managed ETF may provide significant advantages versus ETFs tracking traditional beta benchmarks, particularly when it comes to security selection, asset allocation, and managing currency risk,” says Ryan Issakainen, CFA, Senior Vice President, ETF Strategist at First Trust.
The fund’s portfolio managers include Chris Konstantinos, CFA; Michael Jones, CFA; Adam Grossman, CFA; Kevin Nicholson, CFA; Sam Turner, CMT; Doug Sandler, CFA; and Scott Hays, of RiverFront who share responsibilities for the day-to-day management of the fund’s investment portfolio.