FAAR vs NMI
FAAR vs NMI
First Trust Alternative Absolute Return Strategy ETF vs Nuveen Municipal Income Fund Inc.
Quick Verdict
NMI has a lower expense ratio. FAAR delivered stronger 1-year returns. NMI offers more diversification with 95 holdings.
Side-by-Side Comparison
| Metric | FAAR | NMI | Winner |
|---|---|---|---|
| Expense Ratio | 0.97% | 0.73% | |
| AUM | $191M | - | |
| Dividend Yield | 9.19% | 4.57% | |
| Holdings | 6 | 220 | |
| YTD Return | +13.94% | +11.08% | |
| 1Y Return | +19.26% | +14.95% | |
| 3Y Return (annualized) | +8.78% | +9.79% | |
| 5Y Return (annualized) | +7.33% | +2.16% | |
| Volatility (annualized) | 9.2% | 11.0% | |
| Max Drawdown | -18.8% | -34.4% | |
| Fund Family | First Trust Portfolios (US) | Nuveen | |
| Category | Commodity | Tax Preferred | |
| Inception | May 18, 2016 | Apr 20, 1988 |
FAAR vs NMI Performance
First Trust Alternative Absolute Return Strategy ETF (FAAR) is a ETF from First Trust Portfolios (US) and Nuveen Municipal Income Fund Inc. (NMI) is a ETF from Nuveen. Over the past year FAAR returned +19.26% while NMI returned +14.95%. Year to date, FAAR is up 13.94% versus a gain of 11.08% for NMI.
Over three years, FAAR compounded at +8.78% per year against +9.79% for NMI; over five years the annualized figures are +7.33% and +2.16% respectively. Across the full 10-year window we track, FAAR has the edge at +3.32% annualized vs +0.38%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
NMI has been the more volatile fund, with annualized monthly volatility of 11.0% compared with 9.2% for FAAR. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -18.8% for FAAR and -34.4% for NMI. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.01. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
FAAR charges 0.97% per year while NMI charges 0.73%. On a $10,000 position that is $97 vs $73 annually, a gap of $24 per year that compounds over a long holding period. On income, FAAR currently yields 9.19% against 4.57% for NMI.
Holdings Overlap
FAAR and NMI share 0 holdings out of 96 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, FAAR or NMI?
FAAR has an expense ratio of 0.97% while NMI charges 0.73%. NMI is the cheaper option. On a $10,000 investment, that is $24 per year of difference.
Which performed better, FAAR or NMI?
Over the past year FAAR returned +19.26% vs +14.95% for NMI, so FAAR leads on 1-year performance. Over the longest common window we track (10 years), FAAR annualized +3.32% vs +0.38% for NMI. Past performance does not guarantee future results.
Which is riskier, FAAR or NMI?
NMI has been the more volatile fund at 11.0% annualized versus 9.2% for FAAR. Worst drawdown: FAAR -18.8% vs NMI -34.4%.
Should I hold both FAAR and NMI?
FAAR and NMI have a monthly-return correlation of 0.01, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between FAAR and NMI?
FAAR and NMI share 0 common holdings with a 0.0% weight overlap. Combined, they hold 96 unique securities.
Which pays a higher dividend, FAAR or NMI?
FAAR yields 9.19% while NMI yields 4.57%, so FAAR currently pays the higher dividend yield.
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