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First Trust converts RFDI and RFEM into Active Factor ETFs

First Trust Exchange-Traded Fund III filed two 485BPOS amendments on September 10, 2026, renaming RFDI as AFDM at a 0.80% fee and RFEM as AFEM at 0.85%, effective September 11.

· 2 min read · By ETF.net Research

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Key takeaways

  • First Trust swapped the strategy inside two existing ETFs rather than launching new ones, so holders now own a different approach in the same funds.
  • RiverFront is out as sub-adviser, and the First Trust Investment Committee runs both portfolios on a value, momentum, quality and low-volatility process.
  • Fees came down on both funds, and the international portfolio drops its currency-hedging sleeve.
  • The prospectuses warn past performance says little about the new strategies and that turnover may run higher this year.

Anyone who bought First Trust’s RiverFront Dynamic process is, as of Friday’s prospectuses, in a different strategy inside the same legal funds. The tickers, names, and principal strategies change. The series do not. RiverFront Investment Group is no longer the sub-adviser, and the unitary fees are lower.

RFDI and RFEM become AFDM and AFEM

Holders of the developed-international equity ETF RFDI now own, according to the prospectus, First Trust Active Factor International ETF AFDM, listed on Nasdaq. The fee table sets a unitary management fee of 0.80% of average daily net assets. The prospectus says the fund paid 0.83% before Friday’s change. Under normal market conditions, AFDM will invest at least 80% of net assets, including investment borrowings, in equity securities of international developed-market companies listed on U.S. and non-U.S. exchanges. The fund had about $168 million in assets as of Thursday.

Holders of the emerging-market equity ETF RFEM now own First Trust Active Factor Emerging Markets ETF AFEM, also on Nasdaq. Its unitary fee is 0.85%, which First Trust said in July would be reduced from 0.95%. The fund had about $85 million in assets as of Thursday.

Both prospectuses state that on September 11 each fund “changed its name and Principal Investment Strategies and was no longer managed by a sub-advisor.”

First Trust Advisors L.P. told holders on July 2 that the funds would move, on or around September 14, to a multi-factor quantitative process built around value, momentum, quality, and low volatility, that the international portfolio would drop its currency-hedging sleeve, and that portfolio management would sit with the First Trust Investment Committee. The same trust converted First Trust Merger Arbitrage ETF MARB into First Trust Equity Market Neutral ETF NTRL on June 24, replacing the strategy and reducing the unitary fee to 0.95%.

The new prospectuses warn that performance from before Friday is not necessarily indicative of results under the factor strategies, and that portfolio turnover may run higher in the current fiscal year because of the shift.

ETFs in this story

CRFDIFirst Trust RiverFront Dynamic Developed International ETF49/100—AFDMFirst Trust Active Factor International ETFDRFEMFirst Trust RiverFront Dynamic Emerging Markets ETF44/100—AFEMFirst Trust Active Factor Emerging Markets ETFCNTRLFirst Trust Merger Arbitrage ETF41/100

Frequently asked questions

What happened to RFDI and RFEM?

They were renamed AFDM and AFEM, with new principal investment strategies and no sub-adviser, while remaining the same legal funds on Nasdaq.

Who manages the funds now?

The First Trust Investment Committee, using a multi-factor quantitative process built around value, momentum, quality and low volatility.

What does the new international fund hold?

Under normal conditions it invests at least 80% of net assets in equity securities of international developed-market companies listed on U.S. and non-U.S. exchanges.

Has First Trust done this before?

Yes: the same trust converted its merger arbitrage ETF into First Trust Equity Market Neutral ETF in June, also replacing the strategy and cutting the fee.

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