First Trust Announces March 4, 2024 for Changes in Investment Strategies and Other Related Matters for Large Cap US Equity Select ETF
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Insights
The announced change in investment objective and index for the Large Cap US Equity Select ETF (RNLC) to align with the Bloomberg Shareholder Yield Index represents a strategic shift that could influence investor interest and fund performance. The focus on companies with a strong history of returning value to shareholders through dividends, buybacks and debt reduction suggests a tilt towards value investing and income generation. By selecting firms with sustainable shareholder yield practices, the fund may appeal to investors seeking stability and consistent returns amidst market volatility.
However, this strategy may also limit the fund's exposure to high-growth sectors that typically reinvest profits rather than distributing them. Investors should consider the implications of this strategy on the fund's risk profile and potential for capital appreciation. The change in ticker symbol to SHRY will require market participants to update tracking systems, but the unchanged CUSIP ensures continuity in ownership records.
Transitioning to the Bloomberg Shareholder Yield Index is indicative of a broader industry trend where ETFs are increasingly tailored to specific investment themes and strategies. This move could position the First Trust Bloomberg Shareholder Yield ETF to better compete with other funds targeting similar investment outcomes. The ETF's rebranding and adoption of a new investment objective may also reflect market research insights into investor preferences for funds that prioritize shareholder yield.
It's important to monitor the fund's performance after the transition to assess whether the new strategy resonates with investors and achieves its intended outcomes. Fund flows, both inflows and outflows, following the change will be a key indicator of market reception. Additionally, the renaming and reindexing may potentially lead to a temporary period of adjustment for existing investors as they evaluate the fund's new direction.
From a legal and regulatory standpoint, the change in investment objective and index must comply with SEC regulations and any contractual obligations to investors. It's crucial for First Trust Advisors to thoroughly communicate these changes to their investors, ensuring transparency and adherence to disclosure requirements. The announcement's timing, well in advance of the effective date, is in line with best practices for investor communication.
Investors should review the updated prospectus once available to understand the new investment strategy fully. The legal implications for the fund's operations are minimal given that the CUSIP remains unchanged, which implies no significant alteration in the fund's legal identity. Nevertheless, the change in strategy and index could lead to a reassessment of the fund's risk disclosures and compliance with the new investment mandate.
Additionally, on or around March 4, 2024, the Fund’s name is expected to change to First Trust Bloomberg Shareholder Yield ETF and its new ticker symbol is expected to be SHRY. The Fund’s CUSIP is not expected to change.
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
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 its 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 a Fund 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 its 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.
The 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
Broker Inquiries Sales Team 866-848-9727
Source: First Trust Advisors L.P.
FAQ
What changes were announced for RNLC by First Trust Advisors L.P.?
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