Ticker: EPRE
Exchange: NYSE Arca
Original filing date: January 08, 2021
Effective date: May 14, 2021
Listing Date: TBD
Active: Yes
Index / Benchmark: N/A
Investment Objective:
Universe: U.S. equities
- ESG Fundamental Score
- ESG Disclosure Score
- Free-cash flow analysis
- avoiding or minimizing environmental liabilities
- reducing regulatory risk
- improving productivity and morale
- reducing turnover
- aligning interests of shareholders and management
- reducing reputational risk disclosure
Constituents: TBD
Adviser: First Trust Advisors L.P.
Sub-Adviser: TCW Investment Management Company
Portfolio Managers: Joseph R. Shaposhnik
Administrator: The Bank of New York Mellon
Fund accountant: The Bank of New York Mellon
Transfer agent: The Bank of New York Mellon
Custodian: The Bank of New York Mellon
Distributor: First Trust Portfolios L.P.
Legal counsel: TBD
External accounting: TBD
Compliance: TBD
Prospectus is here.
- LinkedIn: Henry Jim
- henry@etfhearsay.com
- Twitter: @ETFhearsay
Principal Investment Strategies
Under normal market conditions, the Fund seeks to achieve its investment objective by investing at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of U.S. companies that meet the Sub-Advisor's environmental, social and governance (ESG) criteria. Although the Fund emphasizes investments in equity securities of large capitalization companies, it may invest in the equity securities of companies of any size.
The Fund is actively-managed and intends to achieve its objective by investing primarily in a portfolio of companies that TCW Investment Management Company (“TCW” or the “Sub-Advisor”) believes are enduring, cash generating businesses whose leaders prudently manage their environmental, social, and financial resources and whose shares are attractively valued relative to the free cash flow generated by the businesses. The Sub-Advisor believes a focus on environmental, social, and corporate governance (“ESG”) factors can provide competitive advantages for a company, such as avoiding or minimizing environmental liabilities, reducing regulatory risk, improving productivity and morale, reducing turnover, aligning interests of shareholders and management and reducing reputational risk disclosure. To identify companies for inclusion in the portfolio, the Sub-Advisor has developed its own quantitative ESG framework to assess company performance regarding ESG.
The Sub-Advisor uses publicly reported company data to assign a proprietary ESG Fundamental Score and ESG Disclosure Score to each company, which indicates how a company is performing relative to its peers regarding ESG factors. The Fundamental Score indicates how each company is performing relative to its peers on a number of publicly reported ESG factors. The Disclosure Score indicates how much information the company is disclosing, relative to its peers. Some of the factors the Sub-Advisor considers include, but are not limited to, environmental factors, such as greenhouse gas and waste levels, social factors, such as diversity, employee turnover, and level of community spending, and governance factors, such as board composition, board independence, compensation structures and ESG governance.
In addition, the Sub-Advisor conducts rigorous fundamental analysis in seeking to identify predictable growth businesses with high barriers to entry that generate consistent free cash flow.
The Sub-Advisor uses both qualitative and quantitative screening criteria to supplement its fundamental research and portfolio selection. The Sub-Advisor’s screening focuses on companies whose shares are trading at prices that are below intrinsic value, as determined by the Sub-Advisor. When identifying a company for inclusion, the Sub-Advisor reviews, among other things, the business model, the historical performance, the management team and board of directors of a company, and performs a financial analysis to determine whether a company has a low purchase price relative to the free cash flow generation of the enterprise. Portfolio securities may be sold for several reasons, including but not limited to, a deterioration in the underlying fundamentals of the company, a deterioration in the environmental, social and corporate governance performance of the company, another investment security may offer a better investment opportunity or a company has reached its sell target and the investment thesis has played out. The Fund is expected to have significant investments in industrials companies and information technology companies.
The Fund may invest in securities issued by companies in initial public offerings ("IPOs") and it may also invest in securities of special purpose acquisition companies ("SPACs"). A SPAC is a publicly listed acquisition vehicle, whereby one or more sponsors raise a pool of capital with the special purpose of acquiring a private operating company. Unless and until an acquisition is completed, a SPAC generally invests its assets (less a portion retained to cover expenses) in U.S. government securities, money market securities and cash. If an acquisition that meets the requirements for the SPAC is not completed within a pre-established period, the invested funds are returned to the entity’s shareholders.
The Fund is classified as “non-diversified” under the Investment Company Act of 1940, as amended (the “1940 Act”).
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