It is an actively managed ETF that invests in developed-market equities outside the US. Stocks are selected using a multi-factor scoring model that incorporates value, quality, and momentum, and the portfolio also permits a certain allocation to emerging markets.

It is well suited for investors who want diversification across developed markets outside the US while preferring quantitative, model-driven active stock selection.

The ETF is actively managed by First Trust.

RiverFront selects developed-market stocks based on multiple factor scores, including value, quality, and momentum, and adjusts portfolio weightings by also considering region, sector, liquidity, and risk exposure. A rules-based quantitative model is combined with the manager's discretionary judgment, while foreign-currency exposure is hedged dynamically at the manager's discretion.

• Combination of multi-factor quantitative selection and manager discretion
• Dynamic currency hedging approach

Assets under management (AUM) stand at $166.1M, and the total expense ratio is 0.83% per year.

The expense ratio is somewhat higher than that of passive international ETFs, but it offers active selection and discretionary currency hedging.

Performance is driven by trends in developed international equity markets and the direction of the US dollar, and because of its active-selection nature, its trajectory can diverge from peer passive ETFs. Currency moves and differences in regional economic cycles have recently acted as sources of volatility as well.

Fund flows shift based on demand for diversification outside the US and the attractiveness of international valuations. Given the characteristics of the actively managed ETF category, asset size tends to be smaller than that of large passive ETFs, and the fund can be sensitive to changing market conditions.

Active multi-factor selection and discretionary currency hedging are strengths, while a higher expense ratio relative to passive peers and uncertainty in active performance are weaknesses.

VEA, IEFA, and EFA, shown in the table, are lower-cost passive ETFs that invest in developed markets outside the US and serve as direct comparison points against RFDI's active approach. For investors looking to broaden exposure to include the US and the rest of the world, broad-market ETFs such as VXUS and VT can also be considered; these typically carry lower expense ratios than RFDI.

These are the key points to review before investing in RFDI. Because it is an actively managed ETF, it is important to understand and verify in advance the higher expense ratio relative to passive peers, the multi-factor selection methodology, and the dynamic currency hedging policy.

Performance uncertainty from active selection and FX volatility are the main risk factors. The higher expense ratio relative to passive alternatives can have a compounding effect on long-term returns, and short-term losses can be sizable during volatile periods in international markets.

For investors seeking active exposure to developed markets outside the US along with discretionary currency hedging, this is an actively managed ETF worth considering. If keeping costs low and achieving simple diversification are the priorities, passive ETFs such as VEA or IEFA may be a better fit.