First Trust Chindia ETF (FNI)

Overview

The fund operates within the financial sector, with a focused investment strategy that targets the equity markets of China and India. By committing at least 90% of its net assets (this includes funds borrowed for investment purposes) into the common stocks and depositary receipts that make up its benchmark index, the fund aims to mirror the performance of a specified range of companies from these two nations. These companies range from small to large capitalizations, indicating a broad spectrum of investment targets despite the fund’s non-diversified status. The underlying index is carefully constructed, following a modified market capitalization-weighted methodology which ensures that it accurately reflects the dynamics and opportunities within the Chinese and Indian markets.

Products and Services

• Common Stocks

  As a fundamental aspect of its investment strategy, the fund allocates a significant portion of its resources into common stocks listed in the U.S. but issued by companies domiciled in China or India. This allows investors to gain exposure to the growth potential of these emerging markets through U.S. securities. The attraction to common stocks lies in their potential for capital appreciation, providing a foundation for the fund’s performance.

• Depositary Receipts

  Alongside common stocks, the fund invests in depositary receipts, which are negotiable financial instruments issued by banks to represent a foreign company's publicly traded securities. These can be either American Depositary Receipts (ADRs) or Global Depositary Receipts (GDRs), depending on the market. This approach enables investors to engage with international markets with an added layer of security and efficiency, as these receipts are traded on U.S. exchanges and subject to its regulatory framework.

• Modified Market Capitalization-Weighted Index

  The backbone of the fund’s investment philosophy is the adherence to a modified market capitalization-weighted index. This method of index construction adjusts the weightings of securities in the index based on certain factors, rather than just their market capitalizations. By tracking an index that follows such a methodology, the fund aims to provide a more balanced and representative exposure to the market segments of interest, focusing on the performance of both small to large capitalization companies in China and India.