Why First Eagle Soared Into the ETF Market

We decided to connect with Frank Riccio, head of US Wealth Solutions at First Eagle, to learn more. 

VettaFi: After a long history as a provider of mutual funds, why did First Eagle enter the ETF market at the end of 2024?

Riccio: One of our goals as a firm is to provide our investment edge through a vehicle-agnostic approach to meet the demands of investors.  With this in mind, entering the ETF market is something we’ve considered for a very long time, particularly over the past five years, as our clients’ preference for the structure grew tremendously.

Since the passage of the “ETF Rule” (SEC Rule 6c-11) in 2019, which allows for customized baskets and provides flexibility for active managers, we have seen an increased demand for active ETFs.  While that demand prompted us to take a more serious look at ETFs, there was still some uncertainty around whether semi-transparent or fully transparent ETFs for active strategies would win the day. It became clear only in the past 12–24 months that fully transparent ETFs are the path forward. At that point, we felt ready to commit to the ETF structure and make our flagship global value strategies available in ETF format.

VettaFi: You are known for actively managed global and international equity strategies. Can you tell us about the approach of the new ETFs?

Riccio: The Global and Overseas ETFs seek to provide investors access to the pure stock selection capabilities of the First Eagle Global Value team. For anyone familiar with our flagship strategies, we typically invest using a four-pillar approach, with equities at the core and allocations to gold bullion (and/or gold-related securities), corporate bonds and cash to help preserve purchasing power.

Our ETFs, however, seek to deliver our time-tested “value” approach to investing, through portfolios comprised primarily of equities, instead. A contingent of our clients have been asking us to provide a more pure equity approach to our flagship strategies for some time now, so the ETFs are a welcome addition to our lineup for many long-term clients.

VettaFi: What is the investment case for advisors adding international equities to their client portfolios?

Riccio: Rather than thinking about the case for international investing in isolation, it’s easier to think about the drawbacks of a domestic-only approach. We don’t believe the U.S. has a monopoly on good businesses, and by taking a strictly domestic approach to equity investing, you would be eliminating more than 30% of global market capitalization and thousands of publicly listed companies.

Simply put, there are strong management teams running businesses with competitive market positions and strong tangible or intangible assets outside of the U.S. In some cases, these companies are global leaders within their specific industry. The market dominance of the U.S. technology sector during this decade might be obscuring this truth in the minds of some investors — but the market strength shown by international equity markets this year so far, during what has been a difficult environment for U.S. equities, is a strong reminder.

For more news, information, and strategy, visit ETFdb.

First Eagle Investments is an independent, privately owned investment management firm headquartered in New York with approximately $144 billion in assets under management as of December 31, 2024*. Dedicated to providing prudent stewardship of client assets, the firm focuses on active, fundamental and benchmark-agnostic investing, with a strong emphasis on downside mitigation. With a heritage dating back to 1864, First Eagle strives to help clients avoid permanent impairment of capital and earn attractive returns through widely varied economic cycles. The firm’s investment capabilities include equity, fixed income, alternative credit and multi-asset strategies. For more information, please visit www.firsteagle.com. 

*The total AUM represents the combined AUM of (i) First Eagle Investment Management, LLC, (ii) its subsidiary investment advisers, First Eagle Separate Account Management, LLC, First Eagle Alternative Credit (“FEAC”) and Napier Park Global Capital (“Napier Park”), and (iii) Regatta Loan Management LLC, an advisory affiliate of Napier Park, as of December 31, 2024. It includes $0.6 billion of committed and other non-fee-paying capital from First Eagle Alternative Credit, LLC and $3.4 billion of committed and other non-fee-paying capital from Napier Park Global Capital, inclusive of assets managed by Regatta Loan Management LLC. 

The opinions expressed are not necessarily those of the firm and are subject to change based on market and other conditions. This is provided for informational purposes only. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. Any statistics contained herein have been obtained from sources believed to be reliable, but the accuracy of this information cannot be guaranteed. The views expressed herein may change at any time subsequent to the date of issue hereof. The information provided is not to be construed as a recommendation or an offer to buy or sell or the solicitation of an offer to buy, hold or sell any security. The information in this piece is not intended to provide and should not be relied on for accounting, legal, and tax advice.

Investors should consider investment objectives, risks, and charges and expenses carefully before investing. The prospectus and summary prospectus contain this and other information about the Funds and may be viewed at www.firsteagle.com. You may also request printed copies by calling us at 800-747-2008. Please read our prospectus carefully before investing.

ETFs may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market prices (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.

The First Eagle ETFs are distributed by *Quasar Distributors, LLC*.

All investments involve the risk of loss of principal.

The Fund may hold foreign securities and cash with foreign banks, agents, and securities depositories appointed by the Fund’s custodian (each a “Foreign Custodian”). Some Foreign Custodians may be recently organized or new to the foreign custody business. The Fund may invest in foreign investments (including American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”) and European Depositary Receipts (“EDRs”)). Foreign investments, which can be denominated in any applicable foreign currency, are susceptible to less politically, economically and socially stable environments, foreign currency and exchange rate changes, and adverse changes to government regulations. 

To the extent the Fund invests in other investment companies, including money market funds and ETFs, its performance will be affected by the performance of those other investment companies. The Fund may invest in small and medium-size companies, the securities of which can be more volatile in price than those of larger companies. An investment made at a perceived “margin of safety” or “discount to intrinsic or fundamental value” can trade at prices substantially lower than when an investment is made, so that any perceived “margin of safety” or “discount to value” is no guarantee against loss.

The Fund may invest in privately issued securities of domestic common and preferred stock, convertible debt securities, and ADRs, including those which may be resold only in accordance with Rule 144A under the Securities Act of 1933, as amended. Privately issued securities are restricted securities that are not publicly traded. Delay or difficulty in selling such securities may result in a loss to the Fund. Cyber security risk is the risk of an unauthorized breach and access to Fund assets, Fund or customer data (including private shareholder information), or proprietary information, or the risk of an incident occurring that causes the Fund, the Adviser, the Fund’s investment sub-adviser, custodian, transfer agent, distributor and other service providers and financial intermediaries to suffer data breaches, data corruption or lose operational functionality or prevent Fund investors from purchasing, redeeming or exchanging shares or receiving distributions.