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FAAR ETF: What Is It? A Complete Guide to Returns, Expense Ratio, Holdings, and Alternative ETFs

Updated June 19, 2026 · First published June 19, 2026

The First Trust Absolute Return Strategy ETF (FAAR) invests long and short in commodity futures to pursue absolute returns independent of market direction. The key selection criteria are how its strategy differs from long-only commodity ETFs, along with its fees and distribution level, and its low correlation with stocks and bonds is its main strength.

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What Is the First Trust Absolute Return Strategy ETF?

This is an actively managed ETF that takes both long and short positions in exchange-listed commodity futures to pursue long-term absolute returns. It gains exposure to a variety of commodity futures through a Cayman subsidiary structure.

It suits investors who want to diversify their portfolios with an alternative asset that has low correlation with stocks and bonds.

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

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How Does the First Trust Absolute Return Strategy ETF Invest?

ItemDetails
Tracking IndexActive management (does not track a benchmark)
Management StyleActive (long/short commodity futures)
Rebalancing FrequencyAdjusted at the discretion of the portfolio managers
Distribution FrequencyQuarterly
IssuerFirst Trust
Total Expense Ratio0.98%

The portfolio managers actively allocate long and short positions in commodity futures to pursue absolute returns independent of market direction. The fund invests in commodity futures through a Cayman subsidiary, and holds its remaining assets in cash-like instruments such as short-term Treasuries, which are used for margin management.

  • Combining long and short positions seeks profit opportunities even when commodities are falling
  • An active absolute return strategy that does not track an index
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First Trust Absolute Return Strategy ETF Size and Costs (AUM and Management Fee)

Assets under management (AUM) stand at $252.9M, and the total expense ratio is 0.98% per year.

Unlike long-only commodity ETFs, it runs short positions alongside long ones to adjust its directional exposure, which is the structural difference.

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First Trust Absolute Return Strategy ETF Performance and Trends

1-Year Price Performance
Dividend & Yield
Dividend Yield 9.34%
Annual Dividend (TTM) $3.04
1Y Return +7.6%
Next Ex-Dividend Date 9/24/2026
52-Week Price Range
$33
Low $27 High $36
vs. low +21.72% vs. high -9.13%

Returns are determined by commodity prices and the managers' long/short decisions, and they tend to move differently from typical index-tracking commodity ETFs. Because directional bets are reduced, volatility may also be relatively moderate.

Alternative-investment capital tends to flow in when commodity market volatility rises or when demand for diversification away from stocks and bonds grows. However, the category is small to mid-sized compared with broad commodity ETFs.

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First Trust Absolute Return Strategy ETF Pros and Cons

Its strength is alternative-investment exposure with low correlation to stocks and bonds, while its weaknesses are its dependence on active management and a relatively high fee.

💪 Key Strengths

Diversification Effect
Its low correlation with stocks and bonds can help reduce portfolio volatility.
Long/Short Flexibility
Even when commodities decline, it looks for profit opportunities through short positions.
Active Absolute Return
It is not tied to an index and pursues absolute returns at the managers' discretion.

⚠️ Points to Watch

Reliance on Managers
Performance depends heavily on the managers' long/short judgment.
Fee Burden
Because of the active and futures-based structure, fees are higher than those of passive ETFs.
Commodity Volatility
The fund is exposed to commodity futures price swings and roll costs.
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First Trust Absolute Return Strategy ETF Alternative ETFs and Related Products

PDBC, BCI, and CMDT in the table follow broad commodity indexes with long-only strategies, so their directional exposure structure differs from FAAR, which combines long and short positions. Outside the table, investors who want simple long commodity exposure can consider index-tracking funds such as DBC, GSG, and COMT, while those who want an absolute return alternative investment independent of market direction can consider FAAR. It is important to compare differences in management style and fees together.

Peer Comparison ETFs
TickerNamePriceChangeAUMTotal Expense RatioDividend Yield1Y
PDBCPDBCInvesco Optimum Yield Diversified Commodity Strategy No K-1 ETF$20.02-0.5%$8.0B0.59%2.54%+47.9%
BCIBCIabrdn Bloomberg All Commodity Strategy K-1 Free ETF$25.74-0.7%$3.5B0.26%12.51%+16.9%
CMDTCMDTPIMCO Commodity Strategy Active ETF$31.67-0.8%$850.9M0.65%12.09%+14.3%
SDCISDCIUSCF SummerHaven Dynamic Commodity Strategy No K-1 Fund$31.11-0.7%$838.0M0.60%2.61%+35.2%
NBCMNBCMNeuberger Commodity Strategy ETF$31.15-0.7%$577.0M0.65%6.14%+30.3%
Top Holdings
TickerNameWeightPriceChangeMarket CapP/EDividend Yield
CAFCAFMorgan Stanley China A Share Fund Inc0.32%$15.64-1.6%$208.9M-1.68%
MSBTMSBTMorgan Stanley Bitcoin Trust0.29%$21.99-4.9%$0.0M--
USLMUSLMUnited States Lime & Minerals Inc0.48%$111.61-2.0%$3.2B23.90.22%
BNOBNOUnited States Brent Oil Fund LP0.26%$71.39+0.9%$0.0M--
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First Trust Absolute Return Strategy ETF Investor Checkpoints

Here are the points to review before investing in FAAR. Because its strategy differs from that of typical commodity ETFs, it is important to first fully understand the long/short absolute return approach, the cost structure, and its role within your portfolio.

CheckpointWhat to CheckCurrent Status
💵 Expense RatioCumulative cost impact of the active and futures-based structureSomewhat high
🔄 Strategy UnderstandingSuitability of the long/short absolute return strategyNeeds advance review
📊 Diversification EffectCorrelation with stocks and bondsAims for low correlation
💱 Exchange RateImpact on returns converted to Korean wonNo currency hedge

Performance depends heavily on the managers' active judgment, and commodity futures price swings and roll costs affect returns. Even with an absolute return strategy, the possibility of loss remains.

It is worth considering for investors who want to diversify their portfolios with an alternative investment that has low correlation with stocks and bonds. If you want simple commodity exposure, index-tracking ETFs are more suitable, and if you want an active absolute return approach, FAAR is the better fit.

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Disclaimer: This content is for informational purposes only and does not constitute investment advice. All investment responsibility lies with the investor.

This article reflects information as of June 19, 2026.

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