First Trust Vest U.S. Equity Moderate Buffer UCITS ETF - August

Investment rationale

This is an equity UCITS ETF designed to provide a defined outcome profile linked to the S&P 500® Index: participation in index price gains up to a cap and a buffer before fees and expenses against the first 15% of index losses over an approximately one-year Target Outcome Period. The fund has a risk indicator of 3 out of 7 and a recommended holding period of 5 years. The product is intended for investors who can bear loss of capital, are not seeking capital preservation or a guarantee, have specific knowledge or experience of similar products and financial markets, and want exposure to the underlying index. Its use in a portfolio is distinct because it combines U.S. equity market exposure with an options-based capped-upside and buffered-downside structure rather than uncapped conventional equity participation.

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How the strategy works

The fund seeks to provide returns before fees, expenses and taxes that match the price return of the S&P 500® Index up to a predetermined upside cap, while providing a buffer against the first 15% of index losses over a specified approximately one-year Target Outcome Period. Under normal market conditions, it invests substantially all of its assets in FLEX Options referencing the price performance of the S&P 500® Index; these are customised equity or index put and call option contracts cleared by the Options Clearing Corporation and traded on regulated U.S. markets, particularly the Cboe Options Exchange. The Target Outcome Period begins and ends in August each year, and on the first day of each new period the fund resets into a new set of FLEX Options, so the upside cap is likely to change at each reset while the buffer starts each new period at 15%. The share class is accumulating, the fund is actively managed, the benchmark/reference index is the S&P 500® Index, and the recommended holding period is 5 years.

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Investment philosophy

• The fund uses an actively managed Target Outcome Investments® strategy that seeks a pre-determined outcome over a specified Target Outcome Period based on the performance of the S&P 500® Index.

• It invests substantially all assets in FLEX Options referencing the S&P 500® Index, using purchased and written put and call options with customised terms such as strike, style and expiration.

• The portfolio resets annually at the start of each new Target Outcome Period by establishing a new set of FLEX Options designed to deliver that period’s buffer and cap.

• The full target buffer is only sought for shareholders who hold shares from the first day through the last day of the Target Outcome Period; investors entering later or exiting earlier may experience materially different outcomes.

• For the current Target Outcome Period from 24/08/2026 to 20/08/2027, the portfolio references option positions tied to S&P 500® Index and S&P 500® Mini Index calls and puts, with a net cap of 12.51% and net buffer of 14.15% at period start.

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Distinctive features

The distinguishing feature is its defined-outcome structure: it seeks S&P 500® price participation up to a cap while seeking to buffer the first 15% of index losses before fees and expenses over each approximate one-year outcome period. It is delivered through exchange-traded, OCC-cleared FLEX Options and wrapped in a UCITS ETF with daily dealing and secondary-market listings on the London Stock Exchange, Deutsche Börse Xetra and SIX Swiss Exchange. The fund can be held indefinitely because it does not terminate at the end of an outcome period and instead resets annually into a new options structure. The total expense ratio is 0.85% per annum.

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Risks

Capital is at risk: the fund may not achieve its investment objective, the value of shares may fall, and investors may not get back the amount originally invested. The summary risk indicator is 3 out of 7, described as a medium-low risk class, and the product does not include protection from future market performance. The structure is driven by FLEX Options on the S&P 500® Index, and if the index falls by more than 15% over a Target Outcome Period the fund experiences subsequent losses on a one-to-one basis before fees and expenses; returns are also capped on the upside. There is currency risk where payments are received in a different currency, and the target outcomes depend on holding shares for the entire Target Outcome Period.

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Asset manager

The management company and manufacturer is First Trust Global Portfolios Management Limited, based at 24 St Stephen’s Green, Dublin 2, D02 EK82, Ireland, and authorised and regulated by the Central Bank of Ireland. The investment manager is First Trust Advisors, and the sub-investment manager is Vest Financial LLC. Vest Financial LLC is described as the inventor of Target Outcome Investments® and as having launched over 300 products. The fund itself is an open-ended sub-fund of First Trust Global Funds ICAV, domiciled in Ireland and UCITS compliant.

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