Board Approves Termination of Investment Sub-Advisory Agreement for First Trust TCW Opportunistic Fixed Income ETF and First Trust TCW Unconstrained Plus Bond ETF
First Trust Advisors (FTA) announced that the Board of Trustees has voted to terminate the investment sub-advisory agreements for First Trust TCW Opportunistic Fixed Income ETF and First Trust TCW Unconstrained Plus Bond ETF, effective May 9, 2025. The Board approved Smith Capital Investors as the new sub-advisor, pending shareholder approval.
Smith Capital, founded in 2018 with $5.298 billion under management, will be responsible for portfolio management. The Board also approved a 'manager of managers' structure, allowing FTA to appoint and replace sub-advisors without shareholder approval, subject to Board and shareholder approval.
FTA, with approximately $266 billion in assets under management, will continue as the Funds' investment advisor. A special shareholder meeting will be held to vote on these changes.
First Trust Advisors (FTA) ha annunciato che il Consiglio di Amministrazione ha votato per terminare gli accordi di sub-consulenza per l'First Trust TCW Opportunistic Fixed Income ETF e l'First Trust TCW Unconstrained Plus Bond ETF, con effetto dal 9 maggio 2025. Il Consiglio ha approvato Smith Capital Investors come nuovo sub-consulente, in attesa dell'approvazione degli azionisti.
Smith Capital, fondata nel 2018 con 5,298 miliardi di dollari sotto gestione, sarà responsabile della gestione del portafoglio. Il Consiglio ha inoltre approvato una struttura di 'manager di manager', che consente a FTA di nominare e sostituire i sub-consulenti senza approvazione degli azionisti, soggetta all'approvazione del Consiglio e degli azionisti.
FTA, con circa 266 miliardi di dollari in attivi sotto gestione, continuerà a fungere da consulente per gli investimenti dei Fondi. Si terrà un'assemblea straordinaria degli azionisti per votare su queste modifiche.
First Trust Advisors (FTA) anunció que la Junta de Fideicomisarios votó para terminar los acuerdos de subasesoría de inversión para el First Trust TCW Opportunistic Fixed Income ETF y el First Trust TCW Unconstrained Plus Bond ETF, con efecto a partir del 9 de mayo de 2025. La Junta aprobó a Smith Capital Investors como el nuevo subasesor, sujeto a la aprobación de los accionistas.
Smith Capital, fundada en 2018 con 5,298 millones de dólares bajo gestión, será responsable de la gestión de la cartera. La Junta también aprobó una estructura de 'gerente de gerentes', que permite a FTA nombrar y reemplazar subasesores sin la aprobación de los accionistas, sujeta a la aprobación de la Junta y de los accionistas.
FTA, con aproximadamente 266 mil millones de dólares en activos bajo gestión, continuará como asesor de inversiones de los Fondos. Se llevará a cabo una reunión extraordinaria de accionistas para votar sobre estos cambios.
퍼스트 트러스트 어드바이저스 (FTA)는 이사회가 퍼스트 트러스트 TCW 기회주의 채권 ETF 및 퍼스트 트러스트 TCW 비제한 플러스 채권 ETF에 대한 투자 자문 계약을 종료하기로 투표했다고 발표했습니다. 이는 2025년 5월 9일부터 효력이 발생합니다. 이사회는 스미스 캐피탈 인베스터스를 새로운 자문사로 승인하였으며, 주주 승인을 기다리고 있습니다.
스미스 캐피탈은 2018년에 설립되어 53억 달러를 관리하고 있으며, 포트폴리오 관리에 책임을 집니다. 이사회는 또한 '매니저 오브 매니저스' 구조를 승인하여 FTA가 주주 승인 없이 자문사를 임명하고 교체할 수 있도록 하였으며, 이는 이사회와 주주 승인을 조건으로 합니다.
FTA는 약 2,660억 달러의 자산을 관리하고 있으며, 계속해서 펀드의 투자 자문 역할을 수행할 것입니다. 이러한 변경 사항에 대해 투표하기 위해 특별 주주 총회가 개최될 예정입니다.
First Trust Advisors (FTA) a annoncé que le Conseil d'Administration a voté pour mettre fin aux contrats de sous-conseil en investissement pour le First Trust TCW Opportunistic Fixed Income ETF et le First Trust TCW Unconstrained Plus Bond ETF, à compter du 9 mai 2025. Le Conseil a approuvé Smith Capital Investors en tant que nouveau sous-conseiller, sous réserve de l'approbation des actionnaires.
Smith Capital, fondée en 2018 avec 5,298 milliards de dollars sous gestion, sera responsable de la gestion du portefeuille. Le Conseil a également approuvé une structure de 'gestionnaire de gestionnaires', permettant à FTA de nommer et de remplacer des sous-conseillers sans l'approbation des actionnaires, sous réserve de l'approbation du Conseil et des actionnaires.
FTA, avec environ 266 milliards de dollars d'actifs sous gestion, continuera d'agir en tant que conseiller en investissements des Fonds. Une assemblée générale extraordinaire des actionnaires sera convoquée pour voter sur ces changements.
First Trust Advisors (FTA) gab bekannt, dass der Vorstand beschlossen hat, die Investitions-Subberatungsverträge für den First Trust TCW Opportunistic Fixed Income ETF und den First Trust TCW Unconstrained Plus Bond ETF mit Wirkung zum 9. Mai 2025 zu beenden. Der Vorstand genehmigte Smith Capital Investors als neuen Subberater, vorbehaltlich der Zustimmung der Aktionäre.
Smith Capital, gegründet im Jahr 2018 mit 5,298 Milliarden Dollar unter Verwaltung, wird für das Portfoliomanagement verantwortlich sein. Der Vorstand genehmigte außerdem eine 'Manager von Managern'-Struktur, die es FTA ermöglicht, Subberater ohne Zustimmung der Aktionäre zu ernennen und zu ersetzen, vorbehaltlich der Zustimmung des Vorstands und der Aktionäre.
FTA, mit etwa 266 Milliarden Dollar an verwaltetem Vermögen, wird weiterhin als Anlageberater der Fonds fungieren. Eine außerordentliche Hauptversammlung der Aktionäre wird einberufen, um über diese Änderungen abzustimmen.
- Smooth transition plan with interim agreement to avoid service interruption
- New sub-advisor Smith Capital brings specialized fixed-income expertise
- Proposed 'manager of managers' structure could increase operational flexibility
- Uncertainty regarding shareholder approval of new sub-advisory agreement
- Potential disruption in investment strategy due to sub-advisor change
- Risk of not obtaining required shareholder votes for proposed changes
Insights
This announcement represents a significant operational change for two First Trust ETFs, as the Board terminates TCW Investment Management as sub-advisor in favor of Smith Capital Investors. While FTA remains the primary advisor, this transition shifts day-to-day investment decision-making for these fixed income portfolios to a notably smaller firm - Smith Capital manages approximately
The change raises several important considerations for existing shareholders. First, boutique managers like Smith Capital may offer specialized expertise but potentially fewer research resources than larger institutions. Second, the transition creates uncertainty around potential strategy drift, as new managers often implement subtle changes to investment approach and risk parameters.
Perhaps most significant is the proposed "manager of managers" structure, which would fundamentally alter fund governance by allowing FTA to replace sub-advisors without shareholder approval in the future. This represents a meaningful reduction in shareholder control over who ultimately manages their investment capital.
For investors in these ETFs, the required shareholder vote provides an opportunity to evaluate whether Smith Capital's investment philosophy and capabilities align with their expectations. While management transitions don't necessarily impact performance negatively or positively, they do introduce an element of uncertainty that warrants careful consideration.
This filing highlights a consequential governance shift that extends beyond the simple replacement of one sub-advisor with another. The Board's approval of a "manager of managers" structure - contingent on shareholder approval - represents a significant dilution of shareholder rights regarding future investment management decisions.
Under current arrangements, shareholders must approve new sub-advisory relationships. The proposed structure would eliminate this requirement, effectively transferring control from shareholders to FTA for all subsequent sub-advisor appointments or replacements. This fundamentally alters the power dynamic between the ETF sponsor and its investors.
The interim arrangement with Smith Capital demonstrates appropriate continuity planning, ensuring portfolio management remains uninterrupted during the approval process. However, shareholders should recognize that approving both measures simultaneously would constitute accepting not just Smith Capital as the new manager but also relinquishing future approval rights.
While management structures with reduced shareholder input can streamline operations and potentially reduce administrative costs, they also concentrate decision-making authority and reduce accountability to end investors. Shareholders of these funds face a meaningful choice regarding not just who manages their assets today, but how much input they'll have in similar decisions in the future.
In anticipation of the Termination, the Board approved a new investment sub-advisory agreement among the Trust, on behalf of each Fund, FTA, and Smith Capital Investors, LLC (“Smith Capital”) (the “New Sub-Advisory Agreement”). A special meeting of shareholders of the Funds will be held at which the New Sub-Advisory Agreement will be submitted to shareholders of each Fund for approval. There can be no assurance that the necessary percentage of the shareholders of each Fund will vote to approve the New Sub-Advisory Agreement. In addition, to avoid any interruption of investment sub-advisory services for the Funds prior to receipt of shareholder approval of the New Sub-Advisory Agreement, the Board approved an interim investment sub-advisory agreement with Smith Capital for each Fund which will become effective upon the Termination and will remain in effect for a maximum period of 150 days from its effective date.
For each Fund, under the interim sub-advisory agreement and, if approved by the shareholders, the New Sub-Advisory Agreement, Smith Capital, a federally registered investment advisor, will be responsible for the selection and ongoing monitoring of the securities in the Fund’s investment portfolio. Smith Capital, with principal offices at 1430 Blake St,
In addition, the Board, subject to shareholder approval, approved a “manager of managers” structure for the Funds (the “Manager of Managers Structure”). In general terms, if implemented, the Manager of Managers Structure would permit FTA, subject to approval by the Board, to appoint and replace affiliated and unaffiliated investment sub-advisors and enter into and materially amend investment sub-advisory agreements for the Funds without shareholder approval. For the Manager of Managers Structure to be implemented for each Fund, it must be approved by shareholders.
The New Sub-Advisory Agreement and Manager of Managers Structure will be submitted to the shareholders of each Fund for approval at a special meeting of shareholders of the Funds that is expected to be held later this year.
FTA is a federally registered investment advisor and serves as the Fund’s investment advisor. FTA and its affiliate, First Trust Portfolios L.P. (“FTP”), a FINRA registered broker-dealer, are privately-held companies that provide a variety of investment services. FTA has collective assets under management or supervision of approximately
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, FTA 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.
This press release contains certain forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding the goals, beliefs, plans or current expectations of FTA and/or Smith Capital and their respective representatives, taking into account the information currently available to them. Forward-looking statements include all statements that do not relate solely to current or historical fact. For example, forward-looking statements include the use of words such as “anticipate,” “estimate,” “intend,” “expect,” “believe,” “plan,” “may,” “should,” “would,” “will” or other words that convey uncertainty of future events or outcomes. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Funds to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. When evaluating the information included in this press release, you are cautioned not to place undue reliance on these forward-looking statements, which reflect the judgment of FTA and/or Smith Capital and their respective representatives only as of the date hereof. No obligation will be undertaken to publicly revise or update these forward-looking statements to reflect events and circumstances that arise after the date hereof.
In connection with the solicitation of proxies to approve the New Sub-Advisory Agreement and the Manager of Managers Structure, the Trust will file a proxy statement on behalf of each Fund. Because the proxy statement will contain important information, each Fund’s shareholders are urged to read the proxy statement and accompanying materials carefully when they receive them. Each Fund’s shareholders will also be able to obtain copies of these documents, when available, by calling FTA toll-free at 800-621-1675. When filed with the Securities and Exchange Commission (the “SEC”), the proxy statement will be available free of charge at the SEC’s website, www.sec.gov. This press release does not constitute an offer to sell, nor a solicitation of an offer to buy, shares of a Fund, nor is it a solicitation of any proxy. The Trust, the Funds, FTA, Smith Capital and certain of their respective directors/trustees, officers and affiliates may be deemed under the rules of the SEC to be participants in the solicitation of proxies from shareholders in connection with the matters described above. Information about the trustees and officers of the Trust may be found in the Funds’ Statement of Additional Information previously filed with the SEC.
Each Fund’s daily closing price and net asset value per share as well as other information can be found at www.ftportfolios.com.
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First Trust Advisors L.P.
Press Inquiries: Ryan Issakainen 630-765-8689
Analyst Inquiries: Chris Fallow 630-517-7628
Source: First Trust Advisors L.P.
FAQ
When will the TCW sub-advisory agreement termination for First Trust fixed income ETFs take effect?
Who is the new proposed sub-advisor for the First Trust fixed income ETFs?
What is the 'manager of managers' structure being proposed for the First Trust ETFs?
How much assets does First Trust Advisors currently manage?
