On Thursday, First Trust Advisors released its next fund, the First Trust S&P 500 Economic Moat ETF (EMOT), onto the market.
EMOT has a net expense ratio of 0.60%. The fund aims to provide similar investment results to the price and yield of the S&P 500 Moat Economic Index.
“As a pioneer of factor-based indexing, the new S&P 500 Economic Moat Index further expands S&P Dow Jones Indices’ rules-based factor index capabilities,” added Rupert Watts, Head of Factors and Dividend Indices at S&P Dow Jones Indices. “Purposefully designed to present differentiated factor solutions, the S&P 500 Economic Moat Index systematically identifies and measures companies that have long-term competitive advantages.”
Competitive Securities
This index in particular seeks to measure the performance of companies marked with competitive advantages. These advantages include high and sustained return on capital, gross margin, and market share. The top 50 companies scored on these factors are selected and then equally weighed.
In order to provide similar returns to the index, EMOT utilizes a full replication strategy. In doing so, the fund will possess industry concentration to the same extent that the index is. The fund prospectus notes that as of May 31st, 2024, the index has notable exposure to companies within the information technology and consumer discretionary sectors.
“We believe that high-quality stocks with strong and growing competitive advantages may have an edge over their peers,” noted Ryan Issakainen, CFA, Senior Vice President and ETF Strategist at First Trust. “EMOT employs a rigorous, quantitatively-driven approach to investing in these stocks.”
The launch of EMOT comes as First Trust continues to roll out different ETF products. Earlier this week, First Trust released a new buffer strategy with the FT Vest U.S. Equity Equal Weight Buffer ETF – June (RSJN).
See More: First Trust Debuts New Targeted Outcome Fund
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