First Trust to Launch First Trust High Income ETF, First Trust Low Beta Income ETF and First Trust NASDAQ Rising Dividend Achievers ETF

Three income-seeking ETFs, each with a unique investment process to screen for quality dividend-paying companies with the capacity to sustain or grow their dividends

Business Wire


First Trust Advisors L.P. (“First Trust”), known for its more than 200 investment products that offer transparency and tax efficiency, expects to launch three new exchange-traded funds (“ETFs”), the First Trust High Income ETF (NASDAQ:FTHI), the First Trust Low Beta Income ETF (NASDAQ:FTLB) and the First Trust NASDAQ Rising Dividend Achievers ETF (NASDAQ:RDVY). The new funds are expected to begin trading on The NASDAQ Stock Market on January 7, 2014.

The First Trust High Income ETF seeks to provide current income, with a secondary investment objective of capital appreciation. The First Trust Low Beta Income ETF seeks to provide current income. Both funds will invest in large-capitalization equities listed on U.S. exchanges, favoring high dividend-paying common stocks. These funds will also utilize an options strategy in which they will write (sell) U.S. exchange-traded covered call options on the S&P 500 Index seeking to generate additional cash flow in the form of premiums on the options that may be distributed to shareholders on a monthly basis. A premium is the income received by an investor who sells the option contract to another party. The First Trust Low Beta Income ETF may use a portion of the options premiums to purchase U.S. exchange-traded put options on the S&P 500 Index. This hedging strategy will seek to provide this fund with downside protection and reduce the fund’s price sensitivity to declining markets.

The First Trust NASDAQ Rising Dividend Achievers ETF seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the NASDAQ US Rising Dividend Achievers IndexSM (the “Index”). The Index is comprised of 50 companies with a history of raising their dividends and that exhibit the characteristics to potentially continue doing so in the future. The index construction process considers a company’s earnings growth, levels of cash compared to debt and the amount of earnings that are paid out as dividends. Sector weights differ from traditional dividend paying strategies and are currently tilted toward those with the best dividend growth rates, such as the technology sector.

Each of the funds utilizes a unique investment process to screen for high quality dividend-paying companies with the potential to sustain or increase their dividends over time. The First Trust High Income ETF and the First Trust Low Beta Income ETF will combine an equity portfolio that is focused on dividend-paying stocks with an index option strategy to provide an overall portfolio that is tactical, transparent and actively managed. The investment process for the First Trust NASDAQ Rising Dividend Achievers ETF uses a blend of historical and forward looking screens intended to measure a company’s ability to grow its dividend, along with its share price.

“Interest rates continue to remain suppressed and the prospects for strong returns from long duration fixed income instruments is questionable,” said Robert Carey, CFA and Chief Market Strategist of First Trust. “With stock prices reaching new highs, investors are looking for alternative ways to generate income but without taking unnecessary risk. These new funds give investors more choice within the First Trust family of ETFs, while providing the added features of liquidity, transparency and cost efficiency."

Rob Guttschow, CFA, and John Gambla, CFA, FRM, PRM, are Senior Portfolio Managers of the First Trust High Income ETF and the First Trust Low Beta ETF. They will primarily be responsible for daily investment decisions under the direction of an Investment Committee which includes six other individuals with extensive investment experience.

For more information about First Trust, please contact Chris Moon of JCPR at 973-850-7304 or

About First Trust

First Trust Advisors L.P., along with its affiliate First Trust Portfolios L.P., are privately-held companies which provide a variety of investment services, including asset management and financial advisory services, with collective assets under management or supervision of approximately $82 billion as of November 30, 2013 through unit investment trusts, exchange-traded funds, closed-end funds, mutual funds and separate managed accounts. First Trust is based in Wheaton, Illinois. For more information, visit

You should consider each fund’s investment objectives, risks, and charges and expenses carefully before investing. Contact First Trust Portfolios L.P. at 1-800-621-1675 to obtain a prospectus or summary prospectus which contains this and other information about the funds. The prospectus or summary prospectus should be read carefully before investing.

ETF Characteristics

The funds will list and principally trade their shares on the The NASDAQ Stock Market LLC.

The funds may not be fully invested at times. 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 funds by authorized participants, in very large creation/redemption units.

Risk Considerations

The funds’ shares will change in value and you could lose money by investing in the funds. The funds are subject to market risk. Market risk is the risk that a particular security owned by a fund or shares of a fund in general may fall in value. Securities are subject to market fluctuations caused by such factors as economic, political, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Overall securities values could decline generally or could underperform other investments.

The funds may invest in securities issued by companies concentrated in a particular industry. The funds may invest in small capitalization and mid capitalization companies. Such companies may experience greater price volatility than larger, more established companies.

FTHI and FTLB use of options and other derivatives which 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. These risks are heightened when the funds’ portfolio managers use derivatives to enhance the funds’ returns or as a substitute for a position or security, rather than solely to hedge (or offset) the risk of a position or security held by the funds.

The option positions employed by FTHI and FTLB may present additional risk. When selling a call option, the funds will receive a premium; however, this premium may not be enough to offset a loss incurred by the fund if the index level at the expiration of the call option is above the strike price by an amount equal to or greater than the premium. The value of an option may be adversely affected if the market for the option becomes less liquid or smaller, and will be affected by changes in the value and dividend rates of the stock or the index subject to the option, an increase in interest rates, a change in the actual and perceived volatility of the stock market and the common stock or the index and the remaining time to expiration. Additionally, the value of an option does not increase or decrease at the same rate as the underlying stock(s) or the index.

FTHI and FTLB currently intend to effect most creations and redemptions, in whole or in part for cash, rather than in-kind securities. As a result, the funds may be less tax-efficient than if they were to sell and redeem their shares principally in-kind.

If FTHI and FTLB borrow money, they must pay interest and other fees, which will reduce the funds’ returns if such costs exceed the returns on the portfolio securities purchased or retained with such borrowings.

FTHI and FTLB may hold non-U.S. securities in the form of depositary receipts, which may be less liquid than the underlying shares in their primary trading market. Non-U.S. securities are subject to higher volatility than securities of domestic issuers due to possible adverse political, social or economic developments, restrictions on foreign investment or exchange of securities, lack of liquidity, currency exchange rates, excessive taxation, government seizure of assets, different legal or accounting standards, and less government supervision and regulation of exchanges in foreign countries.

FTHI and FTLB are classified as “non-diversified.” A non-diversified fund generally may invest a larger percentage of its assets in the securities of a smaller number of issuers. As a result, the funds may be more susceptible to the risks associated with these particular companies, or to a single economic, political or regulatory occurrence affecting these companies.

FTHI and FTLB are subject to management risk because they are actively managed portfolios. The advisor will apply investment techniques and risk analyses that may not have the desired result. There can be no guarantee that either of the funds will meet its investment objectives.

RDVY’s return may not match the return of the NASDAQ US Rising Dividend Achievers IndexSM. Securities held by RDVY will generally not be bought or sold in response to market fluctuations.

Because of the funds’ relatively small asset size, large inflows and outflows will impact the funds’ market exposure.

First Trust Advisors L.P. is the adviser to the funds. First Trust Advisors L.P. is an affiliate of First Trust Portfolios L.P., the funds’ distributor.

Nasdaq®, OMX®, Nasdaq OMX® and NASDAQ US Rising Dividend Achievers Index℠ are registered trademarks and service marks of The NASDAQ OMX Group, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by First Trust Advisors L.P. The fund has not been passed on by the Corporations as to its legality or suitability. The fund is not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.

Chris Moon, 973-850-7304
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