First Trust to Launch First Trust RBA American Industrial RenaissanceTM ETF and First Trust RBA Quality Income ETF

New exchange-traded funds focus on the American Industrial Renaissance and Equity Income

WHEATON, Ill.--()--First Trust Advisors L.P. (“First Trust”), a leading ETF provider, expects to launch two new exchange-traded funds (“ETFs”), the First Trust RBA American Industrial RenaissanceTM ETF (NASDAQ: AIRR) and the First Trust RBA Quality Income ETF (NASDAQ: QINC). The new funds are expected to begin trading on The NASDAQ Stock Market on March 11, 2014 and track indexes developed by Richard Bernstein Advisors LLC (“RBA”). “These two ETFs seek to address investors’ needs for income and theme-based investing. RBA has long been a proponent of the American industrial renaissance theme and we think we understand it better than most,” said Richard Bernstein, RBA’s Chief Executive and Chief Investment Officer.

The First Trust RBA American Industrial RenaissanceTM ETF

The First Trust RBA American Industrial RenaissanceTM ETF seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the Richard Bernstein Advisors American Industrial RenaissanceTM Index. The Index is designed to measure the performance of small and mid cap U.S. companies in the industrial and community banking sectors. RBA believes there are increasing reasons to expect that the United States may regain industrial market share, based on a number of factors, including: access to cheap energy sources; the relative stability of the U.S. market compared to many emerging markets; and growing availability of bank financing for manufacturers. For many decades, American companies sent their manufacturing work overseas. But today, in a trend known as “reshoring,” many companies are bringing their manufacturing back to the United States. A variety of factors are driving the U.S. manufacturing renaissance including slower growth in hourly compensation compared to some global competitors and lower natural gas and electricity prices. These factors are helping the U.S. to have a competitive advantage over other countries, in our opinion, which we believe will allow U.S. industrial and manufacturing companies to gain market share.

“Cost-based incentives for American companies to manufacture goods overseas have declined dramatically in recent years, particularly for goods produced for U.S. consumers. Not only can domestic manufacturers save on shipping costs and tariffs, but the U.S. shale gas boom has provided a cheap, abundant source of domestic energy,” said Ryan Issakainen, Senior Vice President and ETF Strategist for First Trust. “Meanwhile, emerging market labor costs have continued to trend higher, compared to the relatively stable cost of high quality domestic labor. Taken together, these factors are contributing to an American industrial renaissance, and potentially providing significant competitive advantages for many domestically-oriented manufacturing companies.”

The First Trust RBA Quality Income ETF

The First Trust RBA Quality Income ETF seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the Richard Bernstein Advisors Quality Income Index. The index attempts to control the risks associated with investing in higher-yielding stocks, yet maintain attractive current income. RBA believes stocks with extremely high dividend yields should be viewed cautiously. High dividend yields may simply reflect depressed stock prices in anticipation of dividend cuts or omissions. RBA believes risk actually increases as dividend yield increases and that simply investing in high-yield equities often leads to selecting stocks whose dividends are subsequently cut or discontinued. RBA’s index incorporates several layers of risk control in order to attempt to minimize the probability of dividend cuts and the related underperformance. “As investor appetite for dividend strategy ETFs has grown in recent years, so has the need for risk management, in order to avoid so-called “dividend traps,” Issakainen said. Of course, there is no guarantee that the issuers of the fund’s portfolio securities will declare dividends in the future or that, if declared, they will either remain at current levels or increase over time.

For more information about First Trust, please contact Chris Moon of JCPR at 973-850-7304 or cmoon@jcprinc.com.

About First Trust

First Trust Advisors L.P., along with its affiliate First Trust Portfolios L.P., are privately-held companies which provide a variety of investment services, including asset management and financial advisory services, with collective assets under management or supervision of approximately $86 billion as of February 28, 2014 through unit investment trusts, exchange-traded funds, closed-end funds, mutual funds and separate managed accounts. First Trust is based in Wheaton, Illinois. For more information, visit http://www.ftportfolios.com.

You should consider each fund’s investment objectives, risks, and charges and expenses carefully before investing. Contact First Trust Portfolios L.P. at 1-800-621-1675 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.

ETF Characteristics

The funds list and principally trade their shares on The NASDAQ Stock Market LLC.

The funds’ returns may not match the returns of the underlying indexes. 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.

Investors buying or selling fund shares on the secondary market may incur customary brokerage commissions. Market prices may differ to some degree from the net asset value of the shares. 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, unlike mutual funds, shares may only be redeemed directly from the funds by authorized participants, in very large creation/redemption units.

Risk Considerations

There can be no assurance that the funds’ investment objectives will be achieved. 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 the funds is market risk. Market risk is the risk that a particular security owned by a fund, fund shares or securities in general may fall in value.

The funds may invest in securities issued by companies concentrated in a particular industry which involves additional risk, including limited diversification. The funds may invest in small capitalization and mid capitalization companies. Such companies may be more vulnerable to adverse general market or economic developments, and their securities may be less liquid and may experience greater price volatility than larger, more established companies as a result of several factors, including limited trading volumes, products or financial resources, management inexperience and less publicly available information. Accordingly, such companies are generally subject to greater market risk than larger, more established companies.

General risks of industrial companies include the general state of the economy, intense competition, consolidation, domestic and international politics, excess capacity and consumer demand and spending trends. They may also be significantly affected by overall capital spending levels, economic cycles, technical obsolescence, delays in modernization, labor relations, government regulations and e-commerce initiatives.

Financial companies are especially subject to the adverse effects of economic recession, currency exchange rates, government regulation, decreases in the availability of capital, volatile interest rates, portfolio concentrations in geographic markets and in commercial and residential real estate loans, and competition from new entrants in their fields of business.

AIRR invests in the securities of community banks. Such companies were significantly impacted by the downturn in the U.S. and world economies that began with the decline in the subprime mortgage lending market in the United States. Unlike larger national or other regional banks that are more geographically diversified, a community bank’s financial performance may be highly dependent upon the business environment in certain geographic regions of the United States and may be adversely impacted by any downturn or unfavorable economic or employment developments in its local market and the United States as a whole.

Utilities companies are subject to the imposition of rate caps, increased competition due to deregulation, the difficulty in obtaining an adequate return on invested capital or in financing large construction projects, the limitations on operations and increased costs and delays attributable to environmental considerations, and the capital market’s ability to absorb utility debt.

QINC invests in securities of non-U.S. issuers. Such securities are subject to higher volatility than securities of domestic issuers. Because the fund’s NAV is determined on the basis of U.S. dollars and the fund invests in foreign securities, you may lose money if the local currency of a foreign market depreciates against the U.S. dollar. Additionally, the fund invests 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.

The funds currently have fewer assets than larger funds, and like other relatively new funds, large inflows and outflows may impact the funds’ market exposure for limited periods of time.

The funds are 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, the funds 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 funds are not sponsored, endorsed, sold or promoted by RBA. RBA makes no representation or warranty, express or implied, to the owners of the funds or any member of the public regarding the advisability of trading in the funds. RBA’s only relationship to First Trust Advisors L.P. (“First Trust”) is the licensing of certain trademarks and trade names of RBA and of the indexes, which are determined, composed and calculated by RBA without regard to First Trust or the funds. Licensor has no obligation to take the needs of First Trust or the owners of the funds into consideration in determining, composing or calculating the indexes. Licensor is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the funds to be listed or in the determination or calculation of the equation by which the funds are to be converted into cash. Licensor has no obligation or liability in connection with the administration, marketing or trading of the funds.

Contacts

JCPR
Chris Moon, 973-850-7304
cmoon@jcprinc.com

Contacts

JCPR
Chris Moon, 973-850-7304
cmoon@jcprinc.com