ETF Evaluator: First Trust Alt Abs Ret Strat ETF () Follow This ETF

First Trust Alt Abs Ret Strat ETF Overview

First Trust Alt Abs Ret Strat ETF (FAAR) is an actively managed Commodities Commodities Broad Basket exchange-traded fund (ETF). First Trust launched the ETF in 2016.

The investment seeks to provide investors with long-term total return. The fund is an actively managed exchange-traded fund that seeks to achieve long-term total return through long and short investments in exchange-traded commodity futures contracts ("Commodity Futures") through a wholly-owned subsidiary of the fund organized under the laws of the Cayman Islands (the "Subsidiary"). It does not invest directly in Commodity Futures. The advisor gains exposure to these investments exclusively by investing in the Subsidiary. The Subsidiary is advised by First Trust Advisors L.P., the fund's investment advisor.

About First Trust Alt Abs Ret Strat ETF (FAAR)

There are 2 members of the management team with an average tenure of 10.21 years: John Gambla (2016) and Rob Guttschow (2016). Management tenure is more important for actively managed ETFs than passive index ETFs.

The ETF has 2 primary benchmarks: S&P 500 (TR) (1970) index with a weighting of 100% and Bloomberg Commodity TR USD index with a weighting of 100%. First Trust Alt Abs Ret Strat ETF has 5 securities in its portfolio. The top 10 holdings constitute 66.1% 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 Alt Abs Ret Strat ETF is part of the Real Assets global asset class and is within the Commodities ETF group. First Trust Alt Abs Ret Strat ETF has 0.0% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is 17.1% There is 0.0% 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 Alt Abs Ret Strat ETF has 82.9% of the portfolio in cash.

Assets Under Management

The fund has $197 million in total assets, which is below the $831 million average for the Commodities Broad Basket 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.

FAAR 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 Alt Abs Ret Strat ETF expense ratio is high compared to funds in the Commodities Broad Basket category. First Trust Alt Abs Ret Strat ETF has an expense ratio of 0.98%, which is 48% 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 Alt Abs Ret Strat ETF has a portfolio turnover rate of 0%, which indicates that it holds its assets around /years. By way of comparison, the average portfolio turnover is 26% for the Commodities Broad Basket category.

Recently, in the month of July 2026, First Trust Alt Abs Ret Strat ETF returned -1.4%, which earned it a grade of F, as the Commodities Broad Basket category had an average return of 6.9%. 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 Alt Abs Ret Strat ETF has a trailing yield of 8.50%, which is above the 5.12% 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 Alt Abs Ret Strat ETF Grades

Year to date, the ETF has returned 15.8%, 6.4 percentage points worse than the category, which translates into a grade of D. The fund has returned 20.1% over the past year (grade of F), 8.7% over the past three years (grade of F) and 6.9% per year over the past five years (grade of F) and 4.4% per year over the past 10 years (grade of F).

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