This is an actively managed income ETF that invests most of its net assets in preferred securities and interest-bearing debt securities. Rather than replicating a fixed index, it builds its portfolio through the management team's security selection.

It suits medium- to long-term investors who want stable income with monthly distributions.

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

The fund holds both exchange-listed and over-the-counter securities, centered on preferred securities and capital securities issued by banks, insurers, and utilities. It references a benchmark index but uses an active strategy that combines the management team's bottom-up and top-down analysis to select securities.

• Active security selection rather than passive index tracking
• Diversification across issuers, centered on banks and insurers

Assets under management (AUM) stand at $5.8B, and the total expense ratio (Expense Ratio) is 0.83% per year.

Compared with peer preferred securities ETFs such as PFF and PFLD, it has a structural difference in that it is actively managed, so performance can diverge depending on the results of its security selection.

Preferred security prices tend to move similarly to bond-type assets as the interest rate environment changes, and short-term volatility has continued to track the direction of interest rates.

It is classified as an asset class with steady demand for income. During rate-cut phases, inflows into high-dividend income assets tend to stand out, while during rate-hike phases, fund flows tend to slow by comparison.

Its strength is stable income distributed monthly, while its weaknesses are the relatively high fee that comes with active management and its sensitivity to interest rates.

Among the products in the table, the large-scale PFF differs structurally in that it passively tracks an index, PFLD is a variant focused on relatively short duration, and PCEF and YYY take a different approach by investing in a basket of closed-end funds. In addition, FPEI, from the same First Trust family, is a similar-strategy ETF aimed at institutional investors. Also worth comparing are PGX, Invesco's flagship preferred securities product, PFXF, which focuses on preferred securities excluding the financial sector, and SPFF, which widens its scope to include global issuers.

Here are the points to review before investing in FPE. It is an income asset with monthly distributions, but you should also check the fee burden that comes with active management, its interest rate sensitivity, and issuer credit risk.

When interest rates rise, preferred security prices overall can come under downward pressure. Because of the high concentration in the financial sector, the fund is also exposed to credit events in the banking and insurance sectors, so you should check the degree of diversification as well.

This is an active preferred securities ETF that suits investors who want stable monthly income. If you want to reduce the fee burden, it is also worth comparing large passive products such as PGX and PFF.