The FM Emerald Special Situations ETF is an actively managed fund that focuses on price dislocations created by company-specific change factors rather than tracking a particular index. It does not restrict itself to fixed sectors and instead screens for special situations.

It suits long-term diversified investors who can accept performance gaps driven by the potential for change at individual companies, rather than simply tracking an index.

It is an ETF run with an active management approach by FM Emerald.

The fund is built on the view that changes inside or outside a company can create gaps between price and valuation. It selects securities around special situations such as business transformations, mergers and acquisitions, regulatory changes and management changes, and it may also consider some related non-equity securities.

• Selection centered on company-specific catalysts that are not tied to a particular index
• A flexible scope that examines special situations without sector restrictions

Assets under management (AUM) stand at $31.2M, and the total expense ratio is 0.89% per year.

Because the SPIT ETF emphasizes security-specific events and change factors, its performance trajectory can diverge from that of broad index ETFs. Investors should also watch for gaps between market price and net asset value that can arise depending on trading conditions.

Returns can be sensitive to individual company earnings, the likelihood of deals closing, the regulatory environment and shifts in market risk appetite. The structure means that the results of individual catalysts, rather than correlation with an index, drive the trend.

Fund flows and trading conditions may vary with the market environment. Unlike broad index products, investors' assessment of special situations and their confidence in the active strategy can influence inflows and outflows.

Active management that uncovers individual change factors is its strength, but investors must accept volatility that depends on whether events materialize and on the outcome of security selection.

In the comparison table, the DYNF ETF focuses on factor rotation and has a lower fee and larger asset base than the SPIT ETF. The THRO ETF uses thematic rotation and carries a lower cost burden. The ARKK ETF concentrates on innovation themes, the JMEE ETF takes an approach aimed at improving mid- and small-cap performance, and the PSC ETF offers exposure to the small-cap market. These products differ in investment method and size, so it is hard to regard them as direct substitutes for a special situations selection strategy.

Before investing in the SPIT ETF, investors should review the conditions under which special situations actually translate into value gains, the stock selection criteria of the active strategy, trading conditions and distribution history. Risk factors and the sources of performance may differ from those of products tracking a specific index. Publicly disclosed holdings include CORT, TTI and AMZN.

If a special situation unfolds differently than expected or is delayed, the prices of holdings can swing sharply. Active management can produce results that differ from index-tracking products even when the overall market is rising, and investors should also consider market price gaps that depend on trading conditions.

It is appropriate to approach the fund after understanding the active strategy built around company-specific change factors and confirming that its purpose differs from index-tracking products. Investors should review the lack of distribution history, costs and trading conditions together.