This is an actively managed ETF that holds mainly emerging-market company stocks. It follows a policy of investing most of its net assets in emerging-market equities, and its management framework has shifted from the former discretionary currency-hedging strategy to a factor-based selection approach.

It suits investors who want to add emerging-market stocks to a developed-market-focused portfolio, as well as those who prefer manager selection over index tracking.

It is an ETF run by First Trust using an active (actively managed) approach.

The fund selects emerging-market company stocks from a factor perspective. It has a set policy of keeping most of its net assets in emerging-market company stocks, and it no longer hedges currency exposure at its discretion as it did before. Holdings adjustments follow the managers' judgment rather than an index schedule.

• Factor-based active selection rather than index replication
• Simple equity exposure, with the discretionary currency-hedging strategy removed
• An explicit policy of keeping a high weighting in emerging-market stocks

Assets under management (AUM) stand at $79.3M, and the expense ratio is 0.85% per year.

Because it is actively managed, its fee burden is higher than that of index-tracking emerging-market ETFs, though the fee was lowered along with the restructuring. With modest assets, bid-ask spreads and trading volume should be checked before buying.

Emerging-market stocks are an asset class with wide performance dispersion, driven by the direction of the dollar and shifts in the weightings of China, Taiwan and India. Recent trends have repeatedly moved differently from developed-market indexes, making it hard to judge the strategy on short-term results alone.

Flows into emerging-market equities clearly tend to arrive when the dollar weakens and leave when interest rates rise. Compared with large core ETFs, this product is small, so inflows and outflows have a relatively large impact on trading conditions.

Its strength is gaining emerging-market equity exposure through manager selection, while the fee burden, small size and the fact that its strategy was only recently overhauled are drawbacks.

If the only goal is emerging-market equity exposure, index-tracking alternatives are the first thing to compare. VWO and IEMG, which hold a broad emerging-market index at a low fee, are the leading examples, and if you value trading liquidity and an options market, you can compare it with EEM and others. This product aims for excess returns through factor selection instead of index replication, so you could also consider a combination that keeps the core in low-fee index ETFs and fills only a portion with an active fund. Holdings data could not be confirmed, so it is not listed separately.

Before buying, there are three things to look at: how much costs eat into performance, whether trading conditions are unfavorable, and which stocks the changed strategy actually holds.

Emerging-market stocks are strongly swayed by exchange rates and each country's policies. On top of that comes active selection risk, which can cause results to diverge from the index, and its small size could also mean unfavorable execution prices in a hurry-to-sell situation.

It is an option worth considering if you want to hold emerging-market stocks actively. We recommend measuring costs and trading conditions first, keeping core exposure in a low-fee index ETF, and using this fund as a supporting position.