04/04/2025 – 09:25 AM

WHEATON, Ill.–(BUSINESS WIRE)–
First Trust Advisors L.P. (“First Trust”) a leading exchange-traded fund (“ETF”) provider and asset manager, announced that it has launched two new bitcoin strategy ETFs this week: the Bitcoin Strategy Floor15 ETF Series of Target Outcome ETFs^®: the FT Vest Bitcoin Strategy Floor15 ETF – April (NYSE Arca: BFAP) and the FT Vest Bitcoin Strategy & Target Income ETF (NYSE Arca: DFII) (the “funds”). The funds are the latest addition to First Trust’s lineup of Target Outcome ETFs, which has over $28 billion in total net assets, a 53% increase over one year, and 111 funds, as of 2/28/25.

“Over the past few years, investors have shown a remarkably strong appetite for bitcoin-linked ETFs, but the potential for sharp drawdowns has kept many on the sidelines. We believe BFAP will be a useful tool for those seeking to participate in a meaningful portion of bitcoin’s potential upside, while also addressing downside risk,” said Ryan Issakainen, CFA, Senior Vice President, ETF Strategist at First Trust. “We are also excited for the launch of DFII, which will seek to take advantage of bitcoin’s high volatility to generate income by selling call options, while also providing exposure to a portion of bitcoin’s upside potential.”

About First Trust’s New Strategies:

BFAP seeks an outcome that provides investors with returns (before fees and expenses) that match the price return of a reference asset which seeks to reflect generally (before fees and expenses) the performance of the price of bitcoin (the “Bitcoin Reference Instrument”), up to a predetermined upside cap while providing a maximum loss of 15% (before fees and expenses) of Bitcoin Reference Instrument losses over an approximate period of one year. The fund uses short-term U.S. Treasury securities, cash and cash equivalents, and options on the Bitcoin Reference Instrument to employ a “target outcome strategy.” Target outcome strategies seek to produce pre-determined investment outcomes based upon the performance of the Bitcoin Reference Instrument. The fund does not invest directly in bitcoin.

In seeking to achieve its objective, BFAP will invest in option contracts, which include FLexible EXchange^® Options (“FLEX Options”), standardized listed options and/or over-the-counter options (collectively, “Options”) that each utilize the Bitcoin Reference Instrument as the reference asset, and short-term U.S. Treasury securities, cash and cash equivalents (including “Box Spreads”). The Bitcoin Reference Instrument for the current Target Outcome Period is the Cboe Bitcoin U.S. ETF Index but in future Target Outcome Periods the fund may utilize the following as a Bitcoin Reference Instrument: an exchange-traded grant or trust that holds bitcoin (a “Bitcoin ETP”), or indexes seeking to track the performance of a basket of Bitcoin ETPS (“Bitcoin ETP Indexes”).

If an investor purchases fund shares during a Target Outcome Period at a time when the fund has increased in value from the value of the fund on the first day of the Target Outcome Period (the “Initial Fund Value”), that investor may experience losses that exceed 15% prior to gaining the protection offered by the floor.

“The FT Vest Bitcoin Strategy Floor15 ETF – April represents an innovative step forward in risk-managed cryptocurrency investing. By structuring investments with a defined floor and upside cap, we provide investors with a more controlled way to engage with bitcoin while mitigating downside exposure. This strategy reflects Vest’s commitment to outcome-focused solutions that seek to deliver more certainty and clarity to portfolios,” said Jeff Chang, President of Vest.

DFII is an actively managed ETF that seeks to deliver partial participation in the returns of bitcoin while providing a high level of income. The fund targets an annual income level of 15.0% (before fees and expenses) over the annual income yield of one-month U.S. Treasury securities.*

Under normal market conditions, the fund will invest at least 80% of its net assets in investments providing exposure to bitcoin or income-producing investments, without directly investing in bitcoin. Instead, it will invest in standardized listed options, FLEX Options and options that trade over-the-counter that use reference asset instruments that provide exposure to the returns of bitcoin (“Bitcoin Exposure Instruments”), such as Bitcoin exchange-traded products (ETPs) or Bitcoin ETP Indexes.^* The fund buys call options to gain exposure to bitcoin value increases and sells put options to gain exposure to bitcoin value declines, paying premiums on the call options and earning premiums on the put options. These options typically have an expiration date of one year or less and are rolled forward to maintain exposure to the Bitcoin Exposure Instrument. In combination, the purchased call and sold put options generally provide exposure to price returns of bitcoin both on the upside and downside.

“At Vest, we specialize in delivering outcome-focused investment solutions that remove some of the uncertainty of investing. The FT Vest Bitcoin Strategy & Target Income ETF is a powerful addition to our suite of Target Outcome Investments^®, seeking to generate high income while allowing investors to participate in the evolving digital asset landscape,” said Jeff Chang, President of Vest.

The funds are managed and sub-advised by Vest Financial LLC (“Vest”) using a “target outcome strategy” or pre-determined target investment outcome. Vest is the creator of Target Outcome Investments^® and manager of the longest running buffer strategy fund.

Karan Sood and Trevor Lack, of Vest, will serve as portfolio managers for the funds. The portfolio managers are jointly and primarily responsible for the day-to-day management of the funds.

For more information about First Trust, please contact Ryan Issakainen at (630) 765-8689 or RIssakainen@FTAdvisors.com.

^*DFII does not invest directly in bitcoin. The Bitcoin Exposure Instruments that may be referenced by the options include exchange-traded grantor trusts that hold bitcoin (“Bitcoin ETPs”), indexes seeking to track the performance of a basket of Bitcoin ETPs (“Bitcoin ETP Indexes”). There is no guarantee that the fund’s income target will be achieved. First Trust will periodically assess whether the fund’s income target remains reasonable as market conditions change. This means that if the Bitcoin Exposure Instrument experience an increase in value, the fund will likely not experience that in-crease to the same extent and may significantly underperform the Bitcoin Exposure Instrument over the Target Income Period. The fund will not fully participate in gains experienced by bitcoin. The fund does not seek to achieve any specific level of total return performance compared to the return performance of bitcoin.

About First Trust

First Trust is a federally registered investment advisor and serves as the funds’ investment advisor. First Trust 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. First Trust has collective assets under management or supervision of approximately $266 billion as of February 28, 2025, through unit investment trusts, exchange-traded funds, closed-end funds, mutual funds and separate managed accounts. First Trust 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. First Trust and FTP are based in Wheaton, Illinois. For more information, visit www.ftportfolios.com.

About Vest:

Vest delivers the benefits of derivatives seeking precise, outcome-driven solutions—removing some uncertainty while bringing clarity to portfolios. Our Target Outcome Investments^® simplify derivative strategies into trusted, outcome-focused products, accessible through a broad range of investment solutions. As the leader in Target Buffer ETFs^® and creators of over 250 innovative products, we manage $46B+ in AUM/AUS with a pristine track record of target delivery. Combining technical mastery, practical execution, and trusted partnerships, Vest is committed to making derivatives work for everyone. For more information about Vest, visit www.vestfin.com or contact Daniella Jones at djones@vestfin.com or (203) 249-5416.

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You should consider the funds’ investment objectives, risks, and charges and expenses carefully before investing. Contact First Trust Portfolios L.P. at 1-800-621-1675 or visit www.ftportfolios.com to obtain a prospectus or summary prospectus which contains this and other information about the funds. The prospectus or summary prospectus should be read carefully before investing.

Risk Considerations

You could lose money by investing in a fund. An investment in a fund is not a deposit of a bank and is not insured or guaranteed. There can be no assurance that a fund’s objective(s) will be achieved. Investors buying or selling shares on the secondary market may incur customary brokerage commissions. Please refer to each fund’s prospectus and Statement of Additional Information for additional details on a fund’s risks. The order of the below risk factors does not indicate the significance of any particular risk factor.

There can be no assurance that an active trading market for fund shares will develop or be maintained.

Unlike mutual funds, shares of the fund may only be redeemed directly from a fund by authorized participants in very large creation/redemption units. If a fund’s authorized participants are unable to proceed with creation/redemption orders and no other authorized participant is able to step forward to create or redeem, fund shares may trade at a premium or discount to a fund’s net asset value and possibly face delisting and the bid/ask spread may widen.

The fund may invest in options using Bitcoin ETP Indexes as the Bitcoin Exposure Instrument. These indexes track Bitcoin ETPs on eligible exchanges, serving as benchmarks for Bitcoin ETP price performance. The fund faces risks related to index calculation, including potential inaccuracies in compilation, determination, or methodology, which may result in returns that do not accurately reflect bitcoin’s performance.

A fund’s investment in shares of bitcoin exchange-traded products (“ETPs”) subjects it to the risks of owning investments underlying the bitcoin ETPs, as well as the structural risks. As a shareholder in bitcoin ETPs, a fund bears its proportionate share of the bitcoin ETP expenses, subjecting fund shareholders to duplicative expenses.

The fund’s Bitcoin Reference Instrument is an Index, which tracks Bitcoin ETPs-exchange-traded products that aim to mirror bitcoin’s price movements but are not registered under the 1940 Act, lacking its investor protections. Bitcoin ETPs may trade at prices above or below their underlying assets and carry risks similar to ETFs and direct bitcoin ownership. Their prices may deviate from bitcoin’s actual price, and their short trading history makes them susceptible to volatility. Index calculation risks may also affect accuracy, potentially impacting the fund’s performance.

An investment in a fund is subject to bitcoin risks which include, but are not limited to, the historically and potentially future extreme volatility of bitcoin, the risk of loss due to fraud, theft, manipulation or security failures and other various factors that impact the largely unregulated trading venues on which bitcoin trades. A significant portion of bitcoin is held by a small number of holders and transactions by these holders may influence and/or manipulate the price of bitcoin. If a malicious actor or group of actors were to gain control of more than 50% the mining power in a network (a “51% Attack”), even temporarily, they would have the ability to block new transactions from being confirmed and could, over time, reverse or reorder prior transactions which would significantly impact the value of bitcoin, and thereby the value of the bitcoin exchange-traded products held by a fund. The software that powers a blockchain is known as its protocol and the software may be subject to updates or changes. If one group adopts a proposed upgrade and another does not, a “fork” of the blockchain may result, wherein two distinct sets of users run two different versions of a protocol. A large scale fork could introduce risk, uncertainty, or confusion into the bitcoin blockchain or could fraction the value of the main blockchain and its native crypto asset, which could significantly impact the value of bitcoin, and thereby the value of the bitcoin exchange-traded products held by the fund. Finally, the bitcoin blockchain and its native crypto asset face numerous challenges to gaining widespread adoption as an alternative payments system and it is not clear whether the bitcoin blockchain can overcome this impediment. Alternative public blockchains have been developed and may compete with the bitcoin blockchain and it is possible they may be more successful in gaining adoption. Traditional payment systems may improve their own technical capabilities and offer faster settlement times with lower fees. This could make it difficult for bitcoin blockchain to gain traction as an alternative payments system and thereby negatively impact the price of bitcoin.

A Box Spread is an options strategy with risk and return characteristics similar to cash equivalents. It consists of a synthetic long position (buying a call and selling a put at the same strike price) and a synthetic short position (buying a put and selling a call at a different strike price) on the same reference asset with the same expiration date. This structure aims to eliminate market risk tied to price movements. However, modifying or closing individual options before expiration can reintroduce risk. The strategy’s effectiveness depends on market conditions, interest rates, and the availability of counterparties. If it fails, the fund may be exposed to equity market risks, particularly fluctuations in the S&P 500 Index.

A fund’s use of call options involves risks different from those associated with ordinary portfolio securities transactions and depends on the ability of a fund’s portfolio managers to forecast market movements correctly. As the seller (writer) of a call option, a fund will tend to lose money if the value of the reference index or security rises above the strike price. When writing a call option, a fund will have no control over the exercise of the option by the option holder and the American style options sold by a fund may be exercised at any time before the option expiration date (as opposed to the European style options which may be exercised only on the expiration date). There may be times a fund needs to sell securities in order to settle the options, which may constitute a return of capital and make a fund less tax-efficient than other ETFs. Options may also involve the use of leverage, which could result in greater price volatility than other markets.

A new cap is established at the beginning of each Target Outcome Period and is dependent on prevailing market conditions. As a result, the cap may rise or fall from one Target Outcome Period to the next and is unlikely to remain the same for consecutive Target Outcome Periods.

A target outcome fund will not participate in gains beyond the cap. In the event an investor purchases fund shares after the first day of a Target Outcome Period and the fund has risen in value to a level near the cap, there may be little or no ability for that investor to experience an investment gain on their fund shares; however, the investor will remain vulnerable to downside risk.

A fund that effects all or a portion of its creations and redemptions for cash rather than in-kind may be less tax-efficient.

A fund may be subject to the risk that a counterparty will not fulfill its obligations which may result in significant financial loss to a fund.

The writer of a covered call option foregoes any profit from increases in the market value of the underlying security covering the call option above the sum of the premium and the strike price of the call, but retains the risk of loss if the underlying security declines in value. The Fund will have no control over the exercise of the option by the option holder and may lose the benefit from any capital appreciation on the underlying security.

An issuer or other obligated party of a debt security may be unable or unwilling to make dividend, interest and/or principal payments when due and the value of a security may decline as a result.

Current market conditions risk is the risk that a particular investment, or shares of the fund in general, may fall in value due to current market conditions. For example, changes in governmental fiscal and regulatory policies, disruptions to banking and real estate markets, actual and threatened international armed conflicts and hostilities, and public health crises, among other significant events, could have a material impact on the value of the fund’s investments.

A fund is susceptible to operational risks through breaches in cyber security. Such events could cause a fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss.

Investments in debt securities subject the holder to the credit risk of the issuer and the value of debt securities will generally change inversely with changes in interest rates. In addition, debt securities generally do not trade on a securities exchange making them less liquid and more difficult to value.

The use of derivatives instruments involves different and possibly greater risks than investing directly in securities including counterparty risk, valuation risk, volatility risk, and liquidity risk. Further, losses because of adverse movements in the price or value of the underlying asset, index or rate may be magnified by certain features of the derivatives.

The digital asset industry is a new, speculative, and still-developing industry that faces many risks. In this emerging environment, events that are not directly related to the security or utility of the bitcoin blockchain can nonetheless precipitate a significant decline in the price of bitcoin. Additional instability, failures, bankruptcies or other negative events in the digital asset industry, including events that are not necessarily related to the security or utility of the bitcoin blockchain, could negatively impact the price of bitcoin, and thereby the bitcoin exchange-traded products held by a fund.

There is regulatory uncertainty in digital asset markets in the U.S. and adverse legislation or regulatory developments could significantly harm the value of the bitcoin exchange-traded products or a fund’s shares. It is possible that some of a fund’s digital assets may be determined to be a security or offered or sold as a security under federal or state laws which could impair a fund’s ability to meet its investment objective pursuant to its investment strategy.

A fund normally pays its income as distributions and therefore, a fund may be required to reduce its distributions if it has insufficient income. Additionally at times, a fund may need to sell securities when it would not otherwise do so and could cause distributions from that sale to constitute return of capital. Because of this, a fund may not be an appropriate investment for investors who do not want their principal investment in a fund to decrease over time or who do not wish to receive return of capital in a given period.

Trading FLEX Options involves risks different from, or possibly greater than, the risks associated with investing directly in securities. A fund may experience substantial downside from specific FLEX Option positions and certain FLEX Option positions may expire worthless. There can be no guarantee that a liquid secondary trading market will exist for the FLEX Options and FLEX options may be less liquid than exchange-traded options.

The fund aims to limit losses to 15% of Bitcoin Reference Instrument declines over a set period but does not guarantee success. Investors buying shares after the start or selling before the end of the period may not receive this protection and could lose their entire investment. If the fund has already increased in value when purchased, losses may exceed 15% before protection applies.

A fund may be a constituent of one or more indices or models which could greatly affect a fund’s trading activity, size and volatility.

As inflation increases, the present value of a fund’s assets and distributions may decline.

Interest rate risk is the risk that the value of the debt securities in a fund’s portfolio will decline because of rising interest rates. Interest rate risk is generally lower for shorter term debt securities and higher for longer-term debt securities.

Leverage may result in losses that exceed the amount originally invested and may accelerate the rates of losses. Leverage tends to magnify, sometimes significantly, the effect of any increase or decrease in a fund’s exposure to an asset or class of assets and may cause the value of a fund’s shares to be volatile and sensitive to market swings.

Certain fund investments may be subject to restrictions on resale, trade over-the-counter or in limited volume, or lack an active trading market. Illiquid securities may trade at a discount and may be subject to wide fluctuations in market value.

The portfolio managers of an actively managed portfolio will apply investment techniques and risk analyses that may not have the desired result.

Market risk is the risk that a particular security, or shares of a fund in general may fall in value. Securities are subject to market fluctuations caused by such factors as general economic conditions, political events, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Shares of a fund could decline in value or underperform other investments as a result. In addition, local, regional or global events such as war, acts of terrorism, spread of infectious disease or other public health issues, recessions, natural disasters or other events could have significant negative impact on a fund.

Large inflows and outflows may impact a new fund’s market exposure for limited periods of time.

A fund classified as “non-diversified” may invest a relatively high percentage of its assets in a limited number of issuers. As a result, a fund may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, experience increased volatility and be highly concentrated in certain issuers.

A fund and a fund’s advisor may seek to reduce various operational risks through controls and procedures, but it is not possible to completely protect against such risks. The fund also relies on third parties for a range of services, including custody, and any delay or failure related to those services may affect the fund’s ability to meet its objective.

The prices of options are volatile and the effective use of options depends on a fund’s ability to terminate option positions at times deemed desirable to do so. There is no assurance that a fund will be able to effect closing transactions at any particular time or at an acceptable price.

The fund’s options are exercisable only at expiration at the strike price. Before expiration, their value is based on market quotes or other pricing methods and may not move in direct correlation with the Bitcoin Reference Instrument. Factors such as interest rates, liquidity, supply and demand, and market volatility can impact option prices, which may fluctuate significantly. In low-liquidity periods, valuing the options becomes more challenging, requiring greater reliance on the investment adviser’s judgment. This increases the risk of mispricing, which could affect the fund’s share value.

Because OTC derivatives do not trade on an exchange, the parties to an OTC derivative face heightened levels of counterparty risk, liquidity risk and valuation risk.

The market price of a fund’s shares will generally fluctuate in accordance with changes in the fund’s net asset value (“NAV”) as well as the relative supply of and demand for shares on the exchange, and a fund’s investment advisor cannot predict whether shares will trade below, at or above their NAV.

A fund’s use of put options involves risks different from those associated with ordinary portfolio securities transactions and depends on the ability of a fund’s portfolio managers to forecast market movements correctly. As the seller (writer) of a put option, a fund will tend to lose money if the value of the reference index or security falls below the strike price. When writing a put option, a fund will have no control over the exercise of the option by the option holder and the American style options sold by a fund may be exercised at any time before the option expiration date (as opposed to the European style options which may be exercised only on the expiration date). There may be times a fund needs to sell securities in order to settle the options, which may constitute a return of capital and make a fund less tax-efficient than other ETFs. Options may also involve the use of leverage, which could result in greater price volatility than other markets.

A fund with significant exposure to a single asset class, country, region, industry, or sector may be more affected by an adverse economic or political development than a broadly diversified fund.

If, in any year, a fund which intends to qualify as a Registered Investment Company (RIC) under the applicable tax laws fails to do so, it would be taxed as an ordinary corporation.

A target outcome fund’s investment strategy is designed to deliver returns if shares are bought on the first day that the fund enters into the FLEX Options and are held until the FLEX Options expire at the end of the Target Outcome Period subject to the cap.

Trading on an exchange may be halted due to market conditions or other reasons. There can be no assurance that a fund’s requirements to maintain the exchange listing will continue to be met or be unchanged.

Securities issued or guaranteed by federal agencies and U.S. government sponsored instrumentalities may or may not be backed by the full faith and credit of the U.S. government.

First Trust Advisors L.P. (FTA) is the adviser to the First Trust fund(s). FTA is an affiliate of First Trust Portfolios L.P., the distributor of the fund(s).

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust 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.

The Target Outcome registered trademarks are registered trademarks of Vest Financial LLC.

Definitions

A Box Spread is an offsetting set of options that have risk and return characteristics similar to cash equivalents. A Box Spread consists of a synthetic long position coupled with an offsetting synthetic short position through a combination of options contracts on a reference asset at the same expiration date. The synthetic long position consists of (i) buying a call option and (ii) selling a put option, each on the same reference asset and each with the same strike price and expiration date. The synthetic short position consists of (i) buying a put option and (ii) selling a call option, each on the same reference asset and each with the same expiration date as the synthetic long but with a different strike price from the synthetic long. The difference between the strike prices of the synthetic long and the synthetic short determines the expiration value (or value at maturity) of the Box Spread.

Bitcoin is a decentralized digital asset, maintained by a peer-to-peer network without control by any single entity or government.

An option is a contractual obligation between a buyer and a seller. There are two types of options known as “calls” and “puts.” The buyer of a call option has the right, but not the obligation, to purchase an agreed upon quantity of an underlying asset from the writer (seller) of the option at a predetermined price (the strike price) within a certain window of time (until the option’s expiration), creating a long position.

The Cboe Bitcoin U.S. ETF Index is a modified market capitalization-weighted index that is designed to track the performance of a basket of Bitcoin ETPs listed on U.S. exchanges.

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Ryan Issakainen
First Trust
(630) 765-8689
RIssakainen@FTAdvisors.com

Source: First Trust Advisors L.P.