First Trust New Constructs Core Earnings Leaders ETF (FTCE)

Overview

FTCE is a financial entity that targets investors looking to leverage the performance of U.S. companies showing high earnings quality. The foundation of FTCE's strategy lies in the meticulous selection of stocks based on an earnings capture metric through a robust process. This method incorporates not just the reported earnings of companies but also delves into their core earnings for a more nuanced understanding. By focusing on top performers within the Bloomberg US 1000 (B1000) index across all 11 sectors, FTCE aims to curate a portfolio that not only reflects the cream of the crop in terms of earnings quality but also maintains a diversified exposure across the entirety of the U.S. market. This delicate blend is achieved by a quarterly reconstitution and rebalance of the index, ensuring the portfolio remains agile in capturing earnings quality with a nuanced and dynamic approach.

Products and Services

FTCE primarily offers exposure to a bespoke selection of U.S. stocks through a singular, well-defined product that encapsulates its investment philosophy:

• US Stocks Exposure Index Fund: This distinctive offering hinges on the selection of companies from the Bloomberg US 1000 index, which is renowned for its comprehensive coverage of the U.S. equity market. The fund's selection process is meticulous, beginning with the shortlisting of the top 30% of companies within each sector based on an earnings capture metric. This metric is pivotal as it transcends traditional earnings analysis, integrating core earnings to paint a fuller picture of a company's financial health. Subsequently, the top 3 companies by issuer free float market-cap in each sector are automatically included in the index. The selection process continues until the index comprises 100 companies, distinguished not only by their earnings quality but also by their market capitalization. Holdings within the index are then weighted according to issuer free float market-cap, subject to a 4.5% cap per entity, which mitigates concentration risk and promotes diversification.

This product is engineered for investors who prioritize earnings quality and are seeking diversified exposure to robust U.S. equities. The fund's strategy of reconstituting and rebalancing on a quarterly basis ensures that it remains aligned with the dynamic nature of the U.S. stock market, potentially offering investors a refined vehicle to capture earnings quality across sectors.