First Trust Announces Shareholder Approval of New Investment Sub-Advisory Agreement and "Manager of Managers" Structure for First Trust SSI Strategic Convertible Securities ETF (Nasdaq: FCVT)
First Trust Advisors L.P. ("FTA") announced today that the shareholders of First Trust SSI Strategic Convertible Securities ETF (NASDAQ:FCVT) (the "Fund"), a series of First Trust Exchange-Traded Fund IV (the "Trust"), voted at the special meeting of shareholders to approve for the Fund (1) a new investment sub-advisory agreement (the "New Sub-Advisory Agreement") among the Trust, on behalf of the Fund, FTA, as investment advisor, and SSI Investment Management LLC ("SSI"), as investment sub-advisor, and (2) a "manager of managers" structure (the "Manager of Managers Structure").
New Sub-Advisory Agreement. SSI (or its predecessor entity, SSI Investment Management Inc.) has served as the investment sub-advisor to the Fund since the Fund's inception and continues to sub-advise the Fund. Resolute Investment Managers, Inc. ("RIM"), an indirect wholly-owned subsidiary of Resolute Topco, Inc. ("Topco"), has held a majority ownership interest in SSI since 2019. On December 29, 2023, RIM and certain of its affiliates (collectively, "Resolute") and their equity owners completed a transaction (the "Transaction") with certain creditors of RIM to strengthen Resolute's capital structure (the "Closing"). In connection with the Closing, (i) RIM, Resolute Investment Holdings, LLC ("RIH"), Topco (which was a wholly-owned subsidiary of RIH) and certain of their affiliates and (ii) the prior owners of approximately 93% of RIH entered into an exchange agreement with certain creditors of RIM (the "New Ownership Group") pursuant to which, among other things, new equity interests in Topco were issued to members of the New Ownership Group and the then-existing equity interests in RIH were retired and cancelled. Since the Closing, SSI has been majority owned indirectly by the New Ownership Group. The Closing operated as an "assignment" (as defined in the Investment Company Act of 1940, as amended (the "1940 Act")), resulting in the automatic termination of the Fund's then-existing investment sub‑advisory agreement with SSI as of December 29, 2023. Since then, prior to the receipt of shareholder approval of the New Sub-Advisory Agreement, SSI had been providing investment sub-advisory services to the Fund on an interim basis, as permitted under the 1940 Act. The New Sub-Advisory Agreement became effective upon shareholder approval.
Manager of Managers Structure. In general terms, under the Fund's Manager of Managers Structure, FTA, subject to approval by the Board of Trustees of the Trust, may appoint and replace affiliated and unaffiliated investment sub-advisors and enter into and materially amend investment sub-advisory agreements for the Fund without shareholder approval. In addition, under the Manager of Managers Structure, the Fund is permitted to disclose, as applicable, certain information regarding investment advisory and sub-advisory fees on an aggregate, rather than an individual, basis in various disclosure documents.
As the investment sub-advisor to the Fund, SSI is responsible for, among other things, the selection and ongoing monitoring of the securities in the Fund's investment portfolio. SSI is an investment management firm specializing in alternative investment solutions utilizing convertible assets, equity securities and hedging strategies. SSI serves as investment advisor to investment portfolios with approximately $2.0 billion in assets which it managed as of March 31, 2024. SSI provides investment advisory services to pension and profit-sharing plans, corporations, foundations and endowments, Taft-Hartley plans, family offices, insurance companies, public funds, high-net worth individuals, private investment vehicles, religious organizations and mutual funds.
FTA is a federally registered investment advisor and serves as the Fund's investment advisor. FTA and its affiliate, First Trust Portfolios L.P. ("FTP"), a FINRA registered broker-dealer, are privately-held companies that provide a variety of investment services. FTA has collective assets under management or supervision of approximately $226 billion as of March 31, 2024 through unit investment trusts, exchange-traded funds, closed-end funds, mutual funds and separate managed accounts. FTA is the supervisor of the First Trust unit investment trusts, while FTP is the sponsor. FTP is also a distributor of mutual fund shares and exchange-traded fund creation units. FTA and FTP are based in Wheaton, Illinois.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, FTA is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
This press release does not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of Fund securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.
The Fund's daily closing price and net asset value per share as well as other information can be found at www.ftportfolios.com.
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