First Trust Advisors (“First Trust”) announced the launch of a new ETF, the First Trust New Constructs Core Earnings Leaders ETF (FTCE) (the “fund”), according to a statement obtained by Funds Society.
“The fund seeks investment results that generally correspond to the price and performance (before the fund’s fees and expenses) of a stock index called the Bloomberg New Constructs Core Earnings Leaders Index,” the firm’s release states.
New Constructs determines core earnings by reviewing company reports and identifying non-core and non-recurring gains and losses through its proprietary rating system, using a combination of technology and expert analyst review.
Additionally, FTCE provides exposure to companies that are part of the Bloomberg New Constructs Core Earnings Leaders Index (BCORE). BCORE uses a quantitative approach to select the top 100 companies from the Bloomberg 1000 Index (B1000) with the highest earnings quality, based on Earnings Capture. A positive Earnings Capture reflects stronger business fundamentals and may present an investment opportunity, the statement adds.
“The rise in valuations has been a key driver of returns in the current bull market, while earnings growth has been more moderate. Consequently, for the bull market to continue, we believe investors may focus more on stocks with the potential to deliver high-quality, repeatable earnings,” said Ryan Issakainen, CFA, Senior Vice President and ETF Strategist at First Trust.
Meanwhile, Allison Stone, Head of Multi-Asset Products at Bloomberg Index Services Limited, commented, “It’s exciting to work with First Trust and see how our differentiated approach to earnings analysis is available to investors through an ETF. We’ve combined Bloomberg’s leading data and research with New Constructs’ analysis to create the index with a fresh perspective on the true earnings of companies.”
