First Trust New York Municipal High Income ETF (FMNY US) - Portfolio Construction Methodology

Core Insights - The First Trust New York Municipal High Income ETF (FMNY) focuses on New York tax-exempt income by investing at least 80% of net assets in municipal securities exempt from U.S. federal and New York State/City income taxes [1] Investment Strategy - The ETF targets an effective duration of approximately 3–9 years under normal conditions [1] - At least 50% of net assets are allocated to investment-grade bonds, with pre-refunded or escrowed-to-maturity bonds treated as investment grade [1] - The fund limits below-investment-grade exposure to 50%, with a maximum of 10% in distressed municipals [1] Portfolio Characteristics - The fund may include AMT-subject bonds and utilize derivatives, including futures [1] - As a non-diversified fund, issuer weights may be more concentrated compared to broad municipal benchmarks [1] Risk Management - Risk controls are based on credit-quality bands, duration targeting, structural analysis, and adherence to the distressed cap [1]