First Trust has filed paperwork with the SEC for a “First Trust Enhanced High Income ETF.” The First Trust Enhanced High Income ETF’s primary investment objective is to provide current income. The Fund’s secondary investment objective is to provide capital appreciation. They did not specify a trading symbol or expense ratio in the initial filing.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Fund will invest primarily in U.S.-listed equity securities. The Fund will also sell exchange-listed call options on the Standard & Poor’s 500 Index (the “Index”) in order to seek additional cash flow (in the form of premiums on the options) that may be distributed to shareholders on a monthly basis.
The equity securities held by the Fund will be selected using a mathematical optimization process which attempts to tilt the Fund’s common stock portfolio toward higher dividend paying stocks. The equity securities held by the Fund may include non-U.S. securities that are listed on a U.S. securities exchange in the form of American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”) (collectively “Depositary Receipts”). The equity securities will be periodically rebalanced.
The Fund will sell call options on the Index, a capitalization-weighted index of 500 stocks from a broad range of industries, with the goal of realizing additional income from the option premiums received by the Fund. The call options sold by the Fund will generally have expirations of one week, one month, two months and three months, and will typically be sold at-the-money to out-of-the-money.
For the complete filing click: HERE