First Trust Exchange-Traded Fund IV - First Trust BuyWrite Income ETF (FTHI)
NASDAQ (NMS) NASDAQ (NMS) Primary Summary
FTHI Chart
FTHI's Strategy Isn't Enough To Overcome Structural Limits
The First Trust BuyWrite Income ETF's dividend-focused stock selection fails to deliver meaningful income enhancements over the S&P 500, limiting its appeal versus alternatives like JEPI. The ETF's option-writing strategy offers limited downside protection and caps upside, with sector allocations and holdings closely mirroring the S&P 500. FTHI's yield is primarily sustained by capital return and option income, not by superior dividend yields, and its NAV growth remains modest.
FTHI: Tax-Efficient Dividend Income From Solid Option ETF
FTHI is a high-quality, diversified option ETF with a strong track record, offering a 9.2% yield and monthly distributions—ideal for income-focused investors. The fund's strategy of writing out-of-the-money options on S&P 500 stocks generates reliable income while preserving capital, though it caps upside in bull markets. FTHI underperforms traditional index ETFs during strong market growth, but could outperform if market returns slow, making it attractive in lower-growth environments.
FTHI: Why DIVO Looks Better (Rating Downgrade)
First Trust BuyWrite Income ETF holds 166 stocks and 9 short positions in call options, aiming to enhance distributions. FTHI meets its primary objective of providing income with a yield close to 9%, but price history points to a decay in inflation-adjusted value. Among popular buy-write ETFs, DIVO looks more compelling than FTHI, with a better balance between income and preservation of capital.
First Trust Exchange-Traded Fund IV - First Trust BuyWrite Income ETF (FTHI) FAQ
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First Trust Exchange-Traded Fund IV - First Trust BuyWrite Income ETF Profile
| NASDAQ (NMS) Exchange | US Country |
Overview
The provided company description highlights a financial entity that operates by focusing on investments primarily in equity securities listed on U.S. exchanges. This approach is complemented by an innovative option strategy, which involves writing U.S. exchange-traded call options on the Standard & Poor's 500® Index. This strategy is characterized by its use of a laddered portfolio of call options, each with expirations of less than one year and written at-the-money to slightly out-of-the-money. This method allows the company to pursue its investment objectives through a mix of direct stock investments and the strategic use of options to potentially enhance returns or manage risk.
Products and Services
- Equity Securities Investments
- Option Strategy with U.S. Exchange-Traded Call Options
The company invests in equity securities that are listed on U.S. exchanges, targeting stocks that present significant growth potential. By investing in a diversified portfolio of U.S. stocks, the company aims to capitalize on the dynamic nature of the American equity markets, seeking to offer its clients exposure to leading companies across various sectors.
A distinctive aspect of the company's approach involves utilizing an option strategy, specifically through writing (selling) U.S. exchange-traded call options on the Standard & Poor's 500® Index. This strategy is implemented with a focus on options that are at-the-money to slightly out-of-the-money, with expirations of less than one year. The use of a laddered portfolio of call options aims to provide a systematic approach to option writing, which can enhance the portfolio's income potential while striving to manage risk. This sophisticated strategy is designed to benefit from the option premiums received, which can offer an additional source of return beyond the capital appreciation of the underlying equity investments.
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