First Trust Overhauls Emerging Markets ETF Strategy with Factor-Based Approach — First Trust Advisors L.P.

Event summary

First Trust Advisors L.P. will rename its First Trust RiverFront Dynamic Emerging Markets ETF (RFEM) to First Trust Active Factor Emerging Markets ETF (AFEM), effective September 14, 2026.
The fund will shift from a dynamic emerging markets strategy with currency hedging to a multi-factor quantitative methodology focusing on value, momentum, quality, and low volatility.
Annual management fee reduced from 0.95% to 0.85% of average daily net assets.
Portfolio management team changing to members of the First Trust Investment Committee; sub-advisor role eliminated.

The big picture

First Trust's strategic pivot reflects a broader industry trend toward factor-based investing in emerging markets, aiming to enhance risk-adjusted returns. With $359 billion in AUM as of May 2026, the move underscores First Trust's commitment to adapting its product suite to evolving investor preferences for quantitative strategies.

What we're watching

Performance Impact: How the shift to a multi-factor approach will affect AFEM's returns compared to its peers in emerging markets.
Cost Efficiency: Whether the reduced management fee will attract more investors or pressure profitability.
Execution Risk: The pace at which First Trust can integrate the new factor-based methodology without operational disruptions.