This is an active ETF that holds roughly 20 stocks selected from large-cap US companies in the S&P 500, using a proprietary model that combines a quality screen with trend and momentum factors. It does not track an index as is, and instead builds a compressed, concentrated portfolio.

It suits investors who prefer active, quality- and trend-based selection and a concentrated portfolio within the US large-cap universe.

It is an ETF with an active management approach, run by SMI Advisory.

After narrowing the candidate pool with a quality screen, the fund selects stocks using a proprietary model that combines metrics such as return on capital, cash flow stability, and earnings growth with momentum, linear regression, and trend analysis. It does not replicate an index. Instead, it is a non-diversified structure that actively adjusts its holdings based on signals.

• A proprietary selection model combining quality and trend factors
• A compressed, concentrated portfolio drawn from the S&P 500 pool

Assets under management (AUM) stand at $243.9M, and the expense ratio is 0.85% per year.

Unlike a passive ETF that tracks an index as is, this fund compresses its holdings according to model signals, so it is worth considering the management fee and the difference in tracking approach together.

Performance depends on the trend strength the selection model captures and on the broader large-cap market, and because of the concentrated portfolio, price swings can be larger than the index. Strengths and weaknesses may alternate depending on the period.

Fund flows move with demand for actively selected ETFs, and during volatile market phases, interest in quality and trend strategies can also show up in the flows. The pattern varies with the conditions in the category.

Its strength is active selection that combines quality and trend, while its weaknesses are the concentrated portfolio and the fee burden that comes with active management.

Unlike the hedged equity ETFs such as HELO and FHEQ shown in the table, tail-risk strategies like CAOS, or ETFs that use options and collateral such as CBOX, this fund focuses on quality- and trend-based stock selection. If you want a similar factor approach, you can also consider ETFs such as MTUM for momentum exposure and QUAL and SPHQ for the quality factor. RAA, a real-asset allocation strategy from the same management camp, is another point of comparison.

Here are the points to review before investing in FCTE. Because it is an actively selected ETF that narrows its holdings with a model rather than replicating an index, it is important to thoroughly check its management approach, concentration, and cost burden in advance.

The non-diversified, concentrated structure and the reliance on the model are the main drivers of volatility. In phases when the selection signals diverge from the market, underperformance versus the index can last longer, so position sizing needs to be managed.

This is an active ETF suited to investors who want active, quality- and trend-based selection within the S&P 500 pool. If low-cost passive exposure is the priority, consider a core ETF, and if factor-based selection is the priority, you can consider FCTE.