First Trust Long/Short Equity ETF

First Trust Long/Short Equity ETF (FTLS) is an actively managed fund that owns US-listed stocks it expects to do well and sells short (bets against) others it expects to lag, aiming to soften market swings. Its 1.38% expense ratio is far above the 0.26% average of funds with similar holdings. Over the three years to October 27, 2026, it returned 15.4% a year, behind every fund in that group.

• Over the year to Oct 27, 2026, FTLS returned +10.3%, 9th of 9 among similar funds.
• Its 5-year annualized return was +10.2% and its 10-year +10.0%.
• In the 2020 COVID crash it fell 20.5% and regained its old high 5.3 months after the low.
• Its worst full calendar year was 2022 (-5.6%); its best was 2021 (+19.6%).
• The deepest fall in its price history was 20.5% (Feb 19, 2020 to Mar 23, 2020), recovered by Aug 31, 2020.

As of Jul 31, 2026, the fund held 352 securities; the ten largest made up 28.34% of assets, and 4.86% sat in cash and money-market holdings.

By sector

• Over the three months to Jul 31, 2026, investors added a net $151.8M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +1.04%, -0.72%, +1.87%.

FTLS does not follow an index. The fund's advisor picks stocks with quantitative tools that weigh fundamental, market-related, technical and statistical traits. The first rankings come from the Sabrient Systems Earnings Quality Rank model, a stock-scoring system, along with the advisor's own research. The top-ranked stocks form a "long basket" that the fund owns. The weakest form a "short basket" that it sells short. The two baskets are then combined and optimized into one portfolio.

Short selling means borrowing shares, selling them, and later buying them back to return them. It makes money if the price falls and loses money if the price rises. In normal markets, long positions make up 80% to 100% of the portfolio and short positions 0% to 50%. The fund does not use money from short sales to buy more stock, so its net exposure never goes above 100%. It may hold a large cash position, usually in money market instruments. The advisor can shrink the shorts, or drop them for a while, based on its view of the market. Up to 20% of net assets may go into stock index futures.

Trading is heavy: portfolio turnover was 245%, according to the prospectus filed February 27, 2026. As of July 31, 2026, the fund held 352 securities. The 10 largest made up 28% of assets, led by Apple (7.0%), Microsoft (3.7%) and Nvidia (3.1%). It also held small E-mini S&P 500 and Nasdaq-100 futures positions.

• FTLS charges 1.38% a year, versus an average of 0.26% for the similar funds below (9th of 9, cheapest first).
• Of that, 0.95% is the management fee; the rest covers other fund expenses.

Its short positions are meant to reduce sensitivity to the stock market, and its one-year beta was 0.5 as of October 27, 2026.

FTLS could serve as a steadier part of a stock allocation. Beta measures how much a fund moves with the market, and its one-year beta of 0.5 means it moved about half as much. The fund launched in 2014, so it has no 2008 record. In the 2020 COVID crash, it fell 20.5% from February 19 to March 23 and recovered by August 31, about five months later. In the 2022 bear market, it dropped 9.9% and took about six and a half months to recover. Its worst calendar year was 2022, at -5.19%. Anyone forced to sell in those slumps would still have locked in real losses. Income is small: a 0.85% trailing yield as of October 27, 2026, paid quarterly. The 1.38% expense ratio is a steady drag. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.