First Trust Advisors L.P. (“First Trust”), a provider of more than 200 investment products, many of which offer transparency, tax efficiency and a rules-based approach to stock selection, announces the launch of the Multi-Asset Diversified Income Index Fund (NASDAQ: MDIV) and the First Trust NASDAQ Technology Dividend Index Fund (NASDAQ: TDIV), two exchange-traded funds (ETFs) which began trading on NASDAQ today.
The Multi-Asset Diversified Income Index Fund (“the Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of the NASDAQ Multi-Asset Diversified Income IndexSM. The Fund provides exposure to a diversified mixture of asset classes within a single investment portfolio, and the portfolio is further diversified within each asset class. As a result, the Fund provides the potential for a lower-risk total return alternative to investing solely in one asset class, and since income is generated from multiple sources, the Fund may provide less interest-rate sensitivity than traditional fixed-income securities.
The Fund’s underlying index includes volatility screens designed to limit securities that have high yields strictly due to poor price performance, and the index is rebalanced in every quarter. The index is comprised of domestic and international dividend-paying stocks, real estate investment trusts (REITs), master limited partnerships (MLPs), preferred securities and an ETF that invests in high-yield corporate bonds. Every asset class has its own set of eligibility criteria, and every security in the index is U.S.-listed and meets stringent eligibility criteria based on liquidity, size, volatility and yield.
“With interest rates at historically low levels, income investors have been seeking yield from alternative sources, including multi-asset income investing,” said Robert Carey, CFA, Chief Market Strategist at First Trust. “In our opinion, the Multi-Asset Diversified Income Index Fund is a disciplined and transparent solution for income investors that seeks to provide income generation, diversification and the potential for reduced volatility in a very challenging market.”
The First Trust NASDAQ Technology Dividend Index Fund (“the Fund”) seeks investment results corresponding generally to the price and yield (before the Fund’s fees and expenses) of the NASDAQ Technology Dividend IndexSM. The Fund provides a simplified way to gain targeted access to dividend-paying technology companies.
All securities included in the NASDAQ Technology Dividend Index must be listed on the NASDAQ Stock Market, New York Stock Exchange (NYSE) or NYSE Amex and classified as technology or telecommunications companies according to the Industry Classification Benchmark (ICB).
The index is evaluated semi-annually in March and September, and is rebalanced every quarter. During every evaluation, each stock is classified as a technology or telecommunications company based on its ICB designation. Technology and telecommunications securities are then given collective weights of 80 percent and 20 percent in the index, respectively. To limit high concentrations among larger stocks, the index utilizes caps.
“Given that Internet usage and demand for products such as mobile phones, semiconductors and computer devices are growing rapidly, and the technology industry’s dividend growth rate has outpaced all other sectors over the past seven years, we believe this is an ideal time to invest in the technology field,” said Ryan Issakainen, ETF Strategist at First Trust. “According to Moody’s, it is projected that technology firms will pay out $26 billion in dividends in 2012. This Fund is a convenient way, in our opinion, for investors to position their portfolios in dividend-paying technology companies.”
For more information about First Trust, please contact Chris Moon of JCPR at 973-850-7304 or firstname.lastname@example.org.
About First Trust
First Trust provides a broad range of investment products and services that help financial advisors, registered investment advisors and other third-party asset managers meet the financial needs and objectives of their clients. Among the firm’s more than 200 investment products are its family of 72 ETFs, including First Trust’s core AlphaDEX® series of ETFs. Founded in 1991 with the goal of offering investors a better way to invest, First Trust uses a proprietary, rules-based and quantitative investment methodology to select securities for its AlphaDEX® products. The result is a portfolio weighted on merit, not cap size, that lowers stock-specific risk and offers greater tax efficiency. As of June 30, 2012, 13 First Trust ETFs, including 6 AlphaDEX® ETFs, had four- or five-star ratings from Morningstar**. First Trust is based in Wheaton, Illinois. For more information, visit http://www.ftportfolios.com.
**Ranking Criteria: The Morningstar RatingTM is provided for ETFs with at least a three-year history. Ratings are based on the ETF’s Morningstar Risk-Adjusted Return measure which accounts for variation in monthly performance, placing more emphasis on downward variations and rewarding consistent performance. An ETF’s risk-adjusted return includes a brokerage commission estimate. PLEASE NOTE, this estimate is subject to change and the actual brokerage commission an investor pays may be higher or lower than this estimate. Morningstar compares each ETF’s risk-adjusted return to the open-end mutual fund rating breakpoints for that category. Consistent with the open-end mutual fund ratings, the top 10% of ETFs in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The overall rating for an ETF is based on a weighted average of the ETF’s 3, 5, and 10 year rating. The determination of an ETF’s rating does not affect the retail open end mutual fund data published by Morningstar.
The funds’ shares will change in value, and you could lose money by investing in a fund. One of the principal risks of investing in a fund is market risk. Market risk is the risk that a particular stock owned by a fund, fund shares or stocks in general may fall in value.
The funds’ returns may not match the returns of their underlying indices. The funds may not be fully invested at times. Securities held by the funds will generally not be bought or sold in response to market fluctuations. The funds may invest in small-capitalization and mid-capitalization companies. Such companies may experience greater price volatility than larger, more established companies.
Investors buying or selling fund shares on the secondary market may incur customary brokerage commissions. 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, shares may only be redeemed directly from the fund by authorized participants, in very large creation/redemption units.
The funds invest in securities of non-U.S. issuers. Such securities are subject to higher volatility than securities of domestic issuers. Additionally, the funds invest in depositary receipts, usually in the form of ADRs or GDRs. Investment in ADRs or GDRs may be less liquid than the underlying shares in their primary trading market.
An investment in a fund containing equity securities of foreign issuers is subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting foreign issuers. These risks may be heightened for securities of companies located in, or with significant operations in, emerging market countries.
First Trust NASDAQ Technology Dividend Index Fund Risks:
The fund is 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, a fund may be more susceptible to the risks associated with these particular companies, or to a single economic, political or regulatory occurrence affecting these companies.
The fund is concentrated in stocks of companies in the technology sector. You should be aware that an investment in a portfolio which is concentrated in a particular sector involves additional risks, including limited diversification. The companies engaged in the technology sector are subject to fierce competition, high research and development costs, and their products and services may be subject to rapid obsolescence.
The fund also invests in companies in the telecommunications sector. The companies engaged in the telecommunications sector are subject to fierce competition, government regulations, substantial research and development costs, and their products and services may be subject to rapid obsolescence.
Multi-Asset Diversified Income Index Fund Risks:
REITs are subject to certain risks, including changes in the real estate market, vacancy rates and competition, volatile interest rates, and economic recession.
MLPs are subject to certain risks, including price and supply fluctuations caused by international politics, energy conservation, taxes, price controls, and other regulatory policies of various governments.
Preferred securities combine some of the characteristics of both common stocks and bonds. Preferred securities are typically subordinated to bonds and other debt instruments in a company’s capital structure, in terms of priority to corporate income, and therefore will be subject to greater credit risk than those debt instruments. Preferred securities are also subject to credit risk, interest rate risk and income risk.
High-yield securities are subject to numerous risks, including higher interest rates, economic recession, deterioration of the junk bond market, possible downgrades and defaults of interest and/or principal. High-yield security prices tend to fluctuate more than higher-rated securities and are affected by short-term credit developments to a greater degree.
Investors should consider a fund’s investment objectives, risks, and charges and expenses carefully before investing. Contact First Trust Portfolios L.P. at 1-800-621-1675 or visit www.ftportfolios.com 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.
Nasdaq®, OMX®, Nasdaq OMX®, NASDAQ Multi-Asset Diversified Income IndexSM and NASDAQ Technology Dividend IndexSM 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 Products have not been passed on by the Corporations as to their legality or suitability. The Products are not issued, endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCTS.