WHEATON, Ill.--(BUSINESS WIRE)--First Trust Advisors L.P. (“First Trust”) expects to launch a new exchange-traded fund (“ETF”), the First Trust Heitman Global Prime Real Estate ETF (NYSE Arca: PRME), on November 12, 2015. The fund will seek to provide access to U.S. and non-U.S. real estate securities consisting of shares of public companies with professional management teams that own top tier, prime properties in the world’s dominant cities while seeking long-term total return.
Global prime real estate assets are, by nature, few and in high demand. Historically, constructing a well-diversified portfolio of private prime real estate assets has been difficult to accomplish. But, research has shown that a concentration of investments in prime markets and prime assets in targeted “gateway” cities is obtainable in the publically listed market. Against this backdrop, First Trust believes a portfolio of select public real estate companies, when actively managed by a highly experienced portfolio management team, has the potential to act as a proxy for direct prime real estate investments while seeking to provide high risk-adjusted returns. “This ETF provides a unique tool for investors to gain exposure to an actively managed portfolio of some of the most attractive prime real estate assets around in the world, in a way that’s both diversified and liquid,” said Ryan Issakainen, CFA, Senior Vice President, Exchange-Traded Fund Strategist at First Trust.
Heitman Real Estate Securities LLC (“HRES”), Heitman International Real Estate Securities HK Limited, and Heitman International Real Estate Securities GmbH (collectively “Heitman”) will manage the fund’s portfolio. Heitman will combine top-down and bottom-up analysis when managing the fund’s portfolio in order to identify real estate securities which they believe provide the greatest potential for capturing the benefits of long-term real estate investing. “As investors in the real estate space for almost 50 years, we know first-hand the benefits of investing in prime real estate and prime markets around the world. While we believe owning prime real estate makes sense through all market cycles, we see now as a particularly good time to invest, as real estate investment trusts (“REITs”) are trading at discounts to their underlying real estate value,” said Kathy Sandstrom, Senior Managing Director of Heitman’s Public Real Estate Securities business.
The fund’s Portfolio Managers include Jerry Ehlinger, CFA, Managing Director of HRES and Portfolio Manager; Mark Abramson, Managing Director of Heitman International Real Estate Securities GmbH and Portfolio Manager; and John White, Managing Director of Heitman International Real Estate Securities HK Limited and Portfolio Manager.
For more information about First Trust, please contact Ryan Issakainen of First Trust at (630) 765-8689 or RIssakainen@FTAdvisors.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 $107 billion as of September 30, 2015 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.
About Heitman
Founded in Chicago in 1966, Heitman is a global real estate investment management firm. Heitman is an active participant in the three core segments of the global real estate property and capital markets. With on-the-ground private and public market investment teams, Heitman executes core, value-added, and opportunistic strategies in Private Real Estate Equity, Real Estate Securities, and Real Estate Debt. Heitman's Real Estate Securities group consists of over 25 investment professionals situated in offices across the globe: Chicago, London, Munich, Melbourne, and Hong Kong. For more information, visit https://www.heitman.com/.
You should consider the fund’s investment objectives, risks, and charges and expenses carefully before investing. Contact First Trust Portfolios L.P. at 1-800-621-1675 or visit www.ftportfolios.com to obtain a prospectus or summary prospectus which contains this and other information about the fund. The prospectus or summary prospectus should be read carefully before investing.
ETF Characteristics
The fund will list and principally trade its shares on the NYSE Arca, Inc.
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 fund by authorized participants, in very large creation/redemption units.
Risks
The fund’s shares will change in value and you could lose money by investing in the fund. The fund is subject to management risk because it is an actively managed portfolio. In managing the fund’s investment portfolio, the advisor will apply investment techniques and risk analyses that may not have the desired result. There can be no assurance that the fund’s investment objectives will be achieved.
The fund is subject to market risk. Market risk is the risk that a particular security owned by the fund or shares of the fund in general may fall in value. Some of the securities held by the fund may be restricted or illiquid.
The fund may invest in securities issued by companies concentrated in a particular industry or country.
An investment in a fund containing securities of non-U.S. issuers is subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting non-U.S. issuers. The fund may invest in depositary receipts which may be less liquid than the underlying shares in their primary trading market.
The fund invests in companies in the real estate industry, including REITs and real estate operating companies (“REOCs”). Therefore, the fund is subject to the risks associated with investing in real estate, which may include, but are not limited to, fluctuations in the value of underlying properties; defaults by borrowers or tenants; market saturation; changes in general and local economic conditions; decreases in market rates for rents; increases in competition, property taxes, capital expenditures or operating expenses; and other economic, political or regulatory occurrences affecting companies in the real estate industry. In addition to risks related to investments in real estate generally, investing in REITs and REOCs involves certain other risks related to their structure and focus, which include, but are not limited to, dependency upon management skills, limited diversification, the risks of locating and managing financing for projects, heavy cash flow dependency, possible default by borrowers, the costs and potential losses of self liquidation of one or more holdings, the risk of a possible lack of mortgage funds and associated interest rate risks, overbuilding, property vacancies, increases in property taxes and operating expenses, changes in zoning laws, losses due to environmental damages, changes in neighborhood values and appeal to purchases, the possibility of failing to maintain exemptions from registration under the 1940 Act and, in many cases, relatively small market capitalization, which may result in less market liquidity and greater price volatility.
The fund is subject to interest rate risk. Increases in interest rates typically coincide with higher investor required returns and can lower the present value of a REIT’s future earnings stream if not met with a commensurate increase in growth.
The fund invests, in part, in securities issued by companies operating in Asia, and is therefore subject to certain risks associated specifically with Asia such as currency adjustments and devaluations relative to the U.S. dollar, serious exchange constraints, jurisdictional disputes and market volatility.
A significant number of countries in Europe are member states in the European Union, and the member states no longer control their own monetary policies. In these member states, the authority to direct monetary policies, including money supply and official interest rates for the Euro, is exercised by the European Central Bank. Furthermore, the European sovereign debt crisis has had, and continues to have, a significant negative impact on the economies of certain European countries and their future economic outlooks.
The fund invests in equity securities and the value of the shares will fluctuate with changes in the value of these equity securities. Equity securities prices fluctuate for several reasons, including changes in investors' perceptions of the financial condition of an issuer or the general condition of the relevant stock market.
The fund may effect a portion of creations and redemptions for cash, rather than in-kind securities. As a result, the fund may be less tax-efficient.
The fund currently has fewer assets than larger funds, and like other relatively new funds, large inflows and outflows may impact the fund's market exposure for limited periods of time.
The fund is classified as "non-diversified" and may invest a relatively high percentage of its assets in a limited number of issuers. As a result, the fund may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, experience increased volatility and be highly concentrated in certain issuers.
First Trust Advisors L.P. is the adviser to the fund. First Trust Advisors L.P. is an affiliate of First Trust Portfolios L.P., the fund's distributor.
