First Trust TCW Unconstrained Plus Bond ETF

First Trust TCW Unconstrained Plus Bond ETF (UCON) is an actively managed bond fund that follows no index. It can buy almost any kind of debt: US Treasuries, mortgage securities, corporate bonds, bank loans and up to 70% in high-yield “junk” bonds. It pays income monthly, with a trailing yield of 5.38% as of October 27, 2026. Its 0.86% expense ratio is far above the 0.14% average for similar bond funds.

• Over the year to Oct 27, 2026, UCON returned -0.2%, 3rd of 8 among similar funds.
• Its 5-year annualized return was +2.6%.
• Its worst full calendar year was 2022 (-5.5%); its best was 2023 (+7.8%).
• The deepest fall in its price history was 9.4% (Sep 14, 2021 to Oct 24, 2022), recovered by Dec 13, 2023.

As of Aug 31, 2026, the fund held 437 securities; the ten largest made up 18.58% of assets.

The bonds mature in 10.5 years on average (weighted by size), with an average coupon of 5.21%.

• Over the three months to Aug 31, 2026, investors added a net $59.3M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.18%, -0.87%, +0.43%.

The fund's prospectus, filed December 29, 2025, calls it the First Trust Smith Unconstrained Bond ETF. It names Smith Capital Investors as sub-advisor, meaning the firm that picks the bonds for First Trust. “Unconstrained” means the manager does not have to follow any index. The fund must keep at least 80% of net assets in fixed income. Within that, it can hold up to 70% in junk bonds, 25% in emerging-market issuers, 10% in non-dollar currencies, and up to 50% each in asset-backed, residential mortgage and commercial mortgage securities. Duration measures how much a bond's price reacts to rate changes, and the fund's average duration can range from 0 to 10 years.

Smith Capital moves the fund between defensive, neutral and opportunistic positions, based on its view of the economic cycle and of market prices. It studies each bond one at a time, then adds a big-picture economic view. Trading is heavy: portfolio turnover was 305%. The fund may use futures, options, swaps and forwards to hedge, but its August 31, 2026 holdings report showed no derivatives. Some creations and redemptions are done in cash, which can make it less tax-efficient than some other ETFs.

As of August 31, 2026, the fund held 437 positions and had $3.29 billion in net assets. Corporate issuers made up 65% and US Treasuries 22%. The largest holding was a 4.625% Treasury due August 2036, at 2.9%. The top 10 together made up 18.6%.

• UCON charges 0.86% a year, versus an average of 0.14% for the similar funds below (8th of 8, cheapest first).
• Of that, 0.85% is the management fee; the rest covers other fund expenses.

It is a flexible, higher-yielding bond fund that could sit next to a core bond fund, but its junk-bond allowance and high cost make it a poor fit as the only bond holding.

UCON could add a manager free to shift between Treasuries, mortgages and corporate credit. It did not exist in 2008. In the first quarter of 2020 it lost 4.66%, then gained 6.71% the next quarter. In the 2022 bear market it fell 8%. Its worst calendar year was 2022, down 5.85%. Its deepest drop was 9.4%, from September 14, 2021, to October 24, 2022, and it took about 13.6 months to recover. Anyone who sold or drew income in late 2022 would have locked in losses. The trailing yield was 5.38% as of October 27, 2026, paid monthly. Up to 70% of the fund can be in junk bonds, so its price and income can fall when credit markets are under stress. The 0.86% expense ratio eats into that income. Past results don't predict future returns, and a plan should look at the whole portfolio, not one fund.

Matched by bond funds with the closest average maturity and issuer mix (N-PORT).