First Trust FactorFX UCITS ETF

Issuer: First Trust

Asset Class: Currency

TER: 75bps

Trading Currency: USD

Pays Income: False

Listing Date: 01 Aug 2017

Ticker: FTFX

ISIN: IE00BD5HBQ97

This actively managed fund offers a distinct approach to the foreign exchange market, aiming to deliver positive total returns across various market conditions. It provides systematic exposure to the G10 currencies by employing a quantitative, factor-based strategy. The core of the investment process is a rules-based model that ranks currencies based on three well-researched factors: carry, momentum, and value. The carry factor seeks to profit from the interest rate differentials between countries, the momentum factor aims to capture prevailing trends in currency movements, and the value factor assesses currencies based on their long-term fair value, such as purchasing power parity. By systematically analyzing these drivers, the strategy constructs a portfolio with long positions in the most attractive currencies and short positions in the least attractive ones.

This vehicle may appeal to investors looking to diversify their portfolios beyond traditional equities and fixed income. The currency market often exhibits low correlation to other asset classes, potentially enhancing portfolio resilience, especially during periods of market stress. The fund's objective of generating absolute returns means it is not tied to the performance of any single market or benchmark, instead focusing on exploiting the specific characteristics of the FX market. It is designed for investors who understand and are comfortable with active, quantitative strategies and who are seeking a liquid, transparent, and regulated means to access potential returns from global currency movements. The systematic nature of the process removes emotional decision-making, aiming for consistent application of its factor-based signals.