ETF Evaluator: First Trust Active Factor Emerging Mkts (AFEM) Follow This ETF

First Trust Active Factor Emerging Mkts Overview

First Trust Active Factor Emerging Mkts (AFEM) is an actively managed International Equity Diversified Emerging Mkts exchange-traded fund (ETF). First Trust launched the ETF in 2016.

The investment seeks to provide capital appreciation. The fund will invest at least 80% of its net assets (plus any borrowings for investment purposes) in the securities of emerging market companies. It will invest in equity securities listed and traded on U.S. and non-U.S. exchanges and depositary receipts. Such equity securities may include common stock and depositary receipts (including American Depositary Receipts (“ADRs”), European Depositary Receipts (“EDRs”), Canadian Depositary Receipts (“CDRs”) and Global Depositary Receipts (“GDRs”)). The fund may invest in small, mid and large capitalization companies.

About First Trust Active Factor Emerging Mkts (AFEM)

There are 8 members of the management team with an average tenure of 0.05 years: Daniel Lindquist (2026), Jon Erickson (2026), David McGarel (2026), Stan Ueland (2026), Chris Peterson (2026), Erik Russo (2026), Chris Bush (2026) and Roger Testin (2026). Management tenure is more important for actively managed ETFs than passive index ETFs.

The ETF has 1 primary benchmark: MSCI EM NR USD index with a weighting of 100%. First Trust Active Factor Emerging Mkts has 143 securities in its portfolio. The top 10 holdings constitute 38.0% of the ETF’s assets. The ETF meets the SEC requirement of being classified as a diversified fund. The ETF is not considered to have an ESG focus with its investment selection and management.

First Trust Active Factor Emerging Mkts is part of the Equity global asset class and is within the International Equity ETF group. First Trust Active Factor Emerging Mkts has 98.9% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is 0.8% There is 98.9% allocated to foreign stock, and 0.0% is allocated to preferred stocks. The bond allocation as a percentage of total assets is 0.0% (0.0% domestic bond, 0.0% foreign bond and 0.0% convertible bond). First Trust Active Factor Emerging Mkts has 0.3% of the portfolio in cash.

Assets Under Management

The fund has $83 million in total assets, which is below the $4 billion average for the Diversified Emerging Mkts category. Normally, lower assets under management translates to higher average expense ratios, and greater total assets are desired. However, for some investment categories, such as small-cap investing, it may be difficult for the manager to fully employ the desired active strategy if assets grow too large or too quickly.

AFEM Performance and Fees

The expense ratio measures how much of a fund’s assets are used for administrative expenses and operating expenses, including adviser fees and fees for the transfer agent and custodial services. The First Trust Active Factor Emerging Mkts expense ratio is high compared to funds in the Diversified Emerging Mkts category. First Trust Active Factor Emerging Mkts has an expense ratio of 0.85%, which is 68% higher than its category average, making the fund expense ratio grade a F. While it is difficult to predict returns, it is known that high annual expense ratios reduce your rate of return, and excessive fees are difficult to overcome. Active management normally comes with higher expense ratios than passive index management. Certain investment categories such as small company and foreign also normally have higher expense ratios. It is best to compare fund expense ratios against the category averages for meaningful assessments.

High portfolio turnover can translate to higher expenses and lower aftertax returns. First Trust Active Factor Emerging Mkts has a portfolio turnover rate of 4%, which indicates that it holds its assets around / 0.3 years. By way of comparison, the average portfolio turnover is 46% for the Diversified Emerging Mkts category.

Recently, in the month of September 2026, First Trust Active Factor Emerging Mkts returned -0.1%, which earned it a grade of B, as the Diversified Emerging Mkts category had an average return of -1.1%. The letter grades of A, B, C, D and F are based upon relative rankings within the investment category. A grade of A, for example, would indicate that the return is in the highest 20% for that time period compared to all ETFs in that category.

First Trust Active Factor Emerging Mkts has a trailing yield of 2.55%, which is above the 2.44% category average. The fund normally distributes its income quarterly and its capital gains annually.

It’s natural to seek the best-performing investments, but you must consider the relationship between risk and return and the impact of costs and taxes on your realized returns.

First Trust Active Factor Emerging Mkts Grades

Year to date, the ETF has returned 26.4%, 5.8 percentage points better than the category, which translates into a grade of B. The fund has returned 32.8% over the past year (grade of B), 25.7% over the past three years (grade of A) and 12.1% per year over the past five years (grade of A) and 9.3% per year over the past 10 years (grade of B).

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