First Trust's New Small-Cap ETF Aims To Combine Growth With Income

First Trust introduced the First Trust Small Cap Buy Write Income ETF FTKI. This actively managed fund aims to provide investors with a steady income stream while navigating the volatility of small-cap stocks.

FTKI employs a buy-write strategy, combining stock ownership with the sale of call options on the Russell 2000 Index. This strategy helps generate income while capping potential upside gains. The fund's structure caters to investors looking for both small-cap exposure and an additional income source.

Among the fund's initial holdings are FTAI Aviation Ltd. FTAIM, Insmed Inc. INSM, and Argan Inc. NGX with nearly equal weightings. These stocks reflect the fund's focus on diverse small-cap opportunities. Industrials, Financials, and Health Care currently hold the top sectoral allocations in the fund, at 20.42%, 18.09%, and 13.39% of the total assets under management, respectively.

Also Read: Matrix Asset Advisors Unveils New Active ETF For Value-Driven Investors

The expense ratio carried by this ETF is 0.85%.

With this launch, First Trust’s ETF lineup includes 169 U.S.-listed funds managing a total of $160 billion in assets. As investors continue seeking innovative ways to balance growth and income, FTKI presents an intriguing option in the evolving ETF landscape.

“Income-oriented investors have traditionally shied away from small-cap stocks due to their lower dividend yields,” said Ryan Issakainen, senior vice-president and ETF Strategist at First Trust. “FTKI offers a way to gain access to this segment while potentially generating a relatively high level of income.”

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