ETF Evaluator: First Trust Long/Short Equity ETF () Follow This ETF

First Trust Long/Short Equity ETF Overview

First Trust Long/Short Equity ETF (FTLS) is an actively managed Nontraditional Equity Long-Short Equity exchange-traded fund (ETF). First Trust launched the ETF in 2014.

The investment seeks to provide investors with long-term total return. Under normal conditions, the fund will expose at least 80% of its net assets (including investment borrowings) to U.S. exchange-listed equity securities and/or U.S. exchange-traded funds ("ETFs") that provide exposure to U.S. exchange-listed equity securities. It pursues its investment objective by establishing long and short positions in its portfolio of U.S. exchange-listed equity securities and ETFs. The fund may invest up to 20% of its net assets (including investment borrowings) in U.S. exchange-listed equity index futures contracts.

About First Trust Long/Short Equity ETF (FTLS)

There are 2 members of the management team with an average tenure of 11.90 years: John Gambla (2014) and Rob Guttschow (2014). Management tenure is more important for actively managed ETFs than passive index ETFs.

The ETF has 1 primary benchmark: S&P 500 (TR) (1970) index with a weighting of 100%. First Trust Long/Short Equity ETF has 357 securities in its portfolio. The top 10 holdings constitute 33.7% 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 Long/Short Equity ETF is part of the Equity global asset class and is within the Nontraditional Equity ETF group. First Trust Long/Short Equity ETF has 5.9% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is 59.8% There is 5.9% 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 Long/Short Equity ETF has 34.2% of the portfolio in cash.

Assets Under Management

The fund has $2 billion in total assets, which is above the $320 million average for the Long-Short Equity 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.

FTLS 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 Long/Short Equity ETF expense ratio is high compared to funds in the Long-Short Equity category. First Trust Long/Short Equity ETF has an expense ratio of 1.38%, which is 25% lower than its category average, making the fund expense ratio grade a D. 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 Long/Short Equity ETF has a portfolio turnover rate of 245%, which indicates that it holds its assets around / 0.0 years. By way of comparison, the average portfolio turnover is 157% for the Long-Short Equity category.

Recently, in the month of July 2026, First Trust Long/Short Equity ETF returned 1.9%, which earned it a grade of B, as the Long-Short Equity category had an average return of -0.0%. 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 Long/Short Equity ETF has a trailing yield of 0.88%, which is below the 1.17% 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 Long/Short Equity ETF Grades

Year to date, the ETF has returned 6.1%, 2.2 percentage points worse than the category, which translates into a grade of D. The fund has returned 13.7% over the past year (grade of D), 13.1% over the past three years (grade of C) and 10.1% per year over the past five years (grade of B) and 9.5% per year over the past 10 years (grade of F).

For more ETF grades, analysis and screening tools to help your investment discovery, join AAII for a $2, full-access trial. Learn more here: https://invest.aaii.com/membership.

Otherwise, for more information about First Trust Long/Short Equity ETF, including its riskiness, submit your email to unlock the rest of the article.