W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Name and address of agent for service)
Form N-CSR is to be used by management investment
companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required
to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use
the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information
specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection
of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”)
control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing
the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection
of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
First Trust Specialty Finance and Financial
Opportunities Fund (“Registrant”) has adopted a code of ethics that applies to the Registrant’s principal executive
officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions (“Code
of Ethics”). During the period covered by this Form N-CSR, there were no substantive amendments to the Code of Ethics and there
were no waivers from the Code of Ethics granted to the Registrant’s principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions.
A copy of the currently effective Code of Ethics will be filed with
the Registrant’s annual Form N-CSR.
Not applicable to semi-annual reports on Form N-CSR.
Not applicable to semi-annual reports on Form N-CSR.
(a) Not applicable to the Registrant.
(b) Not applicable to the Registrant.
Not applicable to the Registrant.
Not applicable to the Registrant.
Not applicable to the Registrant.
There were no approvals of an investment
advisory contract during the Registrant’s most recent fiscal half-year.
Not applicable to semi-annual reports on Form N-CSR.
No reportable purchases for the period covered by this report.
There have been no material changes to the
procedures by which the shareholders may recommend nominees to the Registrant’s board of directors, where those changes were implemented
after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407)
(as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
I, James M. Dykas, certify that:
I, Derek D. Maltbie, certify that:
I, James M. Dykas, President and Chief Executive Officer
of First Trust Specialty Finance and Financial Opportunities Fund (the “Registrant”), certify that:
I, Derek D. Maltbie, Treasurer, Chief Financial Officer
and Chief Accounting Officer of First Trust Specialty Finance and Financial Opportunities Fund (the “Registrant”), certify
that:
N-2
|
6 Months Ended |
|
May 31, 2024
$ / shares
shares
|
|---|
| Cover [Abstract] |
|
| Entity Central Index Key |
0001392994
|
| Amendment Flag |
false
|
| Document Type |
N-CSRS
|
| Entity Registrant Name |
First Trust Specialty Finance and Financial
Opportunities Fund
|
| General Description of Registrant [Abstract] |
|
| Investment Objectives and Practices [Text Block] |
The primary investment objective of the Fund is to seek a high level of current income.
As a secondary objective, the Fund seeks an attractive total return. The Fund pursues its investment objectives by investing,
under normal market conditions, at least 80% of its Managed Assets in a portfolio of securities of specialty finance and other financial
companies that Confluence Investment Management LLC (“Confluence” or the “Sub-Advisor”) believes offer attractive opportunities for income and capital appreciation. Under normal market conditions, the Fund concentrates its investments in securities
of companies within industries in the financial sector. “Managed Assets” means the total asset value of the Fund minus the sum of its liabilities, other than the principal amount of borrowings. There can be no assurance that the Fund will achieve its investment objectives.
The Fund may not be appropriate for all investors.
|
| Risk Factors [Table Text Block] |
Principal Risks
The Fund is a closed-end management investment company designed primarily as a long-term
investment and not as a trading vehicle. The Fund is not intended to be a complete investment program and, due to the uncertainty
inherent in all investments, there can be no assurance that the Fund will achieve its investment objectives. The following discussion
summarizes the principal risks associated with investing in the Fund, which includes the risk that you could lose some or all of
your investment in the Fund. The Fund is subject to the informational requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940 and, in accordance therewith, files reports, proxy statements and other information that is available
for review.
Business Development Company (“BDC”) Risk. The Fund invests in closed-end funds that have elected to be treated as BDCs. Investments in BDCs may be subject to a high degree of risk. BDCs typically invest
in small and medium-sized private and certain public companies that may not have access to public equity markets or capital raising,
and investments in these companies present a greater risk of loss due to the companies’ youth and limited track record. BDCs are also generally more susceptible to competition and economic and market changes due to limited products and market shares. A BDC’s portfolio could include a substantial amount of securities purchased in private placements, and its portfolio may carry risks similar
to those of a private equity or venture capital fund. Securities that are not publicly registered may be difficult to value and may be difficult
to sell at a price representative of their intrinsic value. Investments in BDCs are subject to various risks, including management’s ability to meet the BDC’s investment objective, and to manage the BDC’s portfolio when the underlying securities are redeemed or sold, during periods of market turmoil and as investors’ perceptions regarding a BDC or its underlying investments change. Certain BDCs in
which the Fund invests employ the use of leverage in their portfolios through borrowings or in the issuance of preferred stock.
While leverage often serves to increase the yield of a BDC, the leverage also subjects the BDC to increased risks, including the likelihood
of increased volatility and the possibility that the BDC’s common share income will fall if the dividend rate on any preferred shares or the interest rate on any borrowings rises. In addition, the market price for BDCs, together with other dividend paying stocks, may
be negatively affected by a rise in interest rates. Alternatively, declining interest rates could adversely impact the earnings of BDCs
in which the Fund invests, as new loan originations would likely be made at lower yields. BDC shares are not redeemable at the option
of the BDC shareholder and, as with shares of other closed-end funds, they may trade in the secondary market at a discount to their NAV.
Current Market Conditions Risk. 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. As a means to fight inflation,
which remains at elevated levels, the Federal Reserve and certain foreign central banks have raised interest rates and expect to
continue to do so, and the Federal Reserve has announced that it intends to reverse previously implemented quantitative easing. U.S.
regulators have proposed several changes to market and issuer regulations which would directly impact the Fund, and any regulatory changes could adversely impact the Fund’s ability to achieve its investment strategies or make certain investments. Recent and
potential future bank failures could result in disruption to the broader banking industry or markets generally and reduce confidence
in financial institutions and the economy as a whole, which may also heighten market volatility and reduce liquidity. The ongoing
adversarial political climate in the United States, as well as political and diplomatic events both domestic and abroad, have and may
continue to have an adverse impact the U.S. regulatory landscape, markets and investor behavior, which could have a negative impact on the Fund’s investments and operations. Other unexpected political, regulatory and diplomatic events within the U.S. and abroad
may affect investor and consumer confidence and may adversely impact financial markets and the broader economy. For example, ongoing
armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other kilitant groups in the Middle
East, have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe,
the Middle East and the United States. The hostilities and sanctions resulting from those hostilities have and could continue
to have a significant impact on certain Fund investments as well as Fund performance and liquidity. The economies of the United
States and its trading partners, as well as the financial markets generally, may be adversely impacted by trade disputes and other
matters. For example, the United States has imposed trade barriers and restrictions on China. In addition, the Chinese government
is engaged in a longstanding dispute with Taiwan, continually threatening an invasion. If the political climate between the
United States and China does not improve or continues to deteriorate, if China were to attempt invading Taiwan, or if other geopolitical
conflicts develop or worsen, economies, markets and individual securities may be adversely affected, and the value of the Fund’s assets may go down. The COVID-19 global
pandemic, or any future public health crisis, and the ensuing policies enacted by
governments and central banks have caused and may continue to cause significant volatility and uncertainty in global financial markets,
negatively impacting global growth prospects. While vaccines have been developed, there is no guarantee that vaccines will be effective
against emerging future variants of the disease. As this global pandemic illustrated, such events may affect certain geographic
regions, countries, sectors and industries more significantly than others. Advancements in technology may also adversely impact markets
and the overall performance of the Fund. For instance, the economy may be significantly impacted by the advanced development
and increased regulation of artificial intelligence. These events, and any other future events, may adversely affect the prices and liquidity of the Fund’s portfolio investments and could result in disruptions in the trading markets.
Cyber Security Risk. The Fund is susceptible to potential operational risks through breaches in cyber
security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund
to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Fund to incur
regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss.
Cyber security breaches may involve unauthorized access to the Fund’s digital information systems through “hacking” or malicious software coding, but may also result from outside attacks such as denial-of-service attacks through efforts to make network
services unavailable to intended users. In addition, cyber security breaches of the Fund’s third-party service providers, such as its administrator, transfer agent, custodian, or sub-advisor, as applicable, or issuers in which the Fund invests, can also subject
the Fund to many of the same risks associated with direct cyber security breaches. The Fund has established risk management systems designed
to reduce the risks associated with cyber security. However, there is no guarantee that such efforts will succeed, especially
because the Fund does not directly control the cyber security systems of issuers or third party service providers. Substantial costs may
be incurred by the Fund in order to resolve or prevent cyber incidents in the future.
Financial Sector Concentration Risk. Under normal market conditions, the Fund concentrates its investments (i.e., invests
at least 25% of its total assets) in securities of companies within industries in the financial
sector. A fund concentrated in a single industry or sector is likely to present more risks than a fund that is broadly diversified over
several industries or groups of industries. Compared to the broad market, an individual sector may be more strongly affected by changes in
the economic climate, broad market shifts, moves in a particular dominant stock, or regulatory changes. Specialty finance and other
financial companies in general are subject to extensive government regulation, which may change frequently. The profitability of
specialty finance and other financial companies is largely dependent upon the availability and cost of capital funds, and may fluctuate
significantly in response to changes in interest rates, as well as changes in general economic conditions. From time to time, severe
competition may also affect the profitability of specialty finance and other financial companies. Financial companies can be highly
dependent upon access to capital markets and any impediments to such access, such as general economic conditions or a negative perception in the capital markets of a company’s financial condition or prospects, could adversely affect its business. Leasing companies
may be negatively impacted by changes in tax laws which affect the types of transactions in which such companies engage.
Illiquid Securities Risk. The Fund may invest in securities that are considered to be illiquid securities.
Illiquid securities may be difficult to dispose of at a fair price at the times when the Fund believes it is
desirable to do so. The market price of illiquid securities generally is more volatile than that of more liquid securities, which may adversely
affect the price that the Fund pays for or recovers upon the sale of such securities. Illiquid securities are also more difficult to value,
especially in challenging markets.
Income and Interest Rate Risk. The income common shareholders receive from the Fund is based primarily on the dividends
and interest it earns from its investments, which can vary widely over the short and long-term.
If prevailing market interest rates drop, distribution rates of the Fund’s portfolio holdings may decline which then may adversely affect the Fund’s distributions on its common shares as well. The Fund’s income also would likely be adversely affected when prevailing short-term interest rates increase and the Fund is utilizing leverage.
Leverage Risk. The use of leverage by the Fund can magnify the effect of any losses. If the income
and gains from the securities and investments purchased with leverage proceeds do not cover the cost of leverage, the
return to the common shares will be less than if leverage had not been used. Leverage involves risks and special considerations for
common shareholders including: (i) the likelihood of greater volatility of net asset value and market price of the common shares than
a comparable portfolio without leverage; (ii) the risk that fluctuations in interest rates on borrowings will reduce the return to the
common shareholders or will result in fluctuations in the dividends paid on the common shares; (iii) in a declining market, the use of leverage
is likely to cause a greater decline in the net asset value of the common shares than if the Fund were not leveraged, which may result
in a greater decline in the market price of the common shares; and (iv) when the Fund uses certain types of leverage, the investment
advisory fee payable to the Advisor and by the Advisor to the Sub-Advisor will be higher than if the Fund did not use leverage. To
the extent the Fund uses leverage and invests in BDCs that also use leverage, the risks associated with leverage will be magnified,
potentially significantly.
Management Risk and Reliance on Key Personnel. The implementation of the Fund’s investment strategy depends upon the continued contributions of certain key employees of the Advisor and Sub-Advisor, some
of whom have unique talents and experience
and would be difficult to replace. The loss or interruption of the services of a key
member of the portfolio management team could have a negative impact on the Fund.
Market Discount from Net Asset Value. Shares of closed-end investment companies such as the Fund frequently trade at a
discount from their net asset value. The Fund cannot predict whether its common shares will
trade at, below or above net asset value.
Market Risk. Investments held by the Fund, as well as shares of the Fund itself, are subject
to market fluctuations caused by real or perceived adverse economic conditions, political events, regulatory factors or market
developments, changes in interest rates and perceived trends in securities prices. Shares of the Fund could decline in value or
underperform other investments as a result of the risk of loss associated with these market fluctuations. In addition, local, regional or
global events such as war, acts of terrorism, market manipulation, government defaults, government shutdowns, regulatory actions, political
changes, diplomatic developments, the imposition of sanctions and other similar measures, spread of infectious diseases
or other public health issues, recessions, or other events could have a significant negative impact on the Fund and its investments. Any
of such circumstances could have a materially negative impact on the value of the Fund’s shares, the liquidity of an investment, and result in increased market volatility. During any such events, the Fund’s shares may trade at increased premiums or discounts to their net asset value the bid/ask spread on the Fund’s shares may widen and the returns on investment may fluctuate.
Operational
Risk. The Fund is subject to risks arising from
various operational factors, including, but not limited to, human error, processing
and communication errors, errors of the Fund’s service providers, counterparties or other third-parties, failed or inadequate processes
and technology or systems failures. The Fund relies on third parties for a range of services, including custody. Any delay or failure
relating to engaging or maintaining such service providers may affect the Fund’s ability to meet its investment objective. Although
the Fund and the Advisor seek to reduce these operational risks through controls and procedures, there is no way to completely
protect against such risks.
Potential Conflicts of Interest Risk. First Trust, Confluence and the portfolio managers have interests which may conflict
with the interests of the Fund. In particular, First Trust and Confluence currently manage
and may in the future manage and/or advise other investment funds or accounts with the same or substantially similar investment objective
and strategies as the Fund. In addition, while the Fund is using leverage, the amount of the fees paid to First Trust (and by First
Trust to Confluence) for investment advisory and management services are higher than if the Fund did not use leverage because the fees
paid are calculated based on managed assets. Therefore, First Trust and Confluence have a financial incentive to leverage the Fund.
REIT, Mortgage-Related and Asset-Backed Securities Risk. Investing in REITs involves certain unique risks in addition to investing in the real estate industry in general. REITs are subject to interest rate
risk (especially mortgage REITs) and the risk of default by lessees or borrowers. An equity REIT may be affected by changes in the
value of the underlying properties owned by the REIT. A mortgage REIT may be affected by the ability of the issuers of its portfolio
of mortgages to repay their obligations. REITs whose underlying assets are concentrated in properties used by a particular industry
are also subject to risks associated with such industry. REITs may have limited financial resources, their securities may trade less
frequently and in a limited volume, and their securities may be subject to more abrupt or erratic price movements than larger company
securities.
In addition to REITs, the Fund may invest in a variety of other mortgage-related securities,
including commercial mortgage securities and other mortgage-backed instruments. Mortgage-related securities are susceptible
to adverse economic, political or regulatory events that affect the value of real estate. Mortgage-related securities are also significantly
affected by other factors such as borrower defaults, delinquencies, realized or liquidation losses and other shortfalls. Rising
interest rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates,
and may reduce the market value of the securities. In addition, mortgage-related securities are subject to prepayment risk, the risk
that borrowers may pay off their mortgages sooner than expected, particularly when interest rates decline. This can reduce the Fund’s returns because the Fund may have to reinvest that money at lower prevailing interest rates.
The Fund’s investments in other asset-backed securities are subject to risks similar to those associated with mortgage-backed securities, as well as additional risks associated with the nature of the assets and
the servicing of those assets. In general, mortgage-related securities and asset-backed securities are subject to credit risk,
extension risk, interest rate risk, liquidity risk and valuation risk.
Reorganization Risk. The Board of Trustees of the Fund has approved the reorganization of the Fund into
AOD. If approved by shareholders, the transaction is anticipated to be consummated during 2024, subject
to the satisfaction of applicable regulatory requirements and approvals and customary closing conditions. There is no assurance
when or whether such approvals, or any other approvals required for the transaction, will be obtained. Under the terms of the proposed
transaction, shareholders of the Fund would receive shares of AOD, which has its own investment strategies, and thereafter cease
to be a shareholder of the Fund. More information on the proposed transaction, including the risks and considerations associated with
the transaction as well as the risks of investing in
AOD, is contained in registration statement/proxy materials. Shareholders should refer
to such registration statement/proxy materials, which are available at https://www.ftportfolios.com/LoadContent/gohdcqj3gy4y.
Specialty Finance and Other Financial Companies Risks. The profitability of specialty finance and other financial companies in which the Fund may invest is largely dependent upon the availability and cost of capital,
and may fluctuate significantly in response to changes in interest rates, as well as changes in general economic conditions. Any
impediments to a specialty finance or other financial company’s access to capital markets, such as those caused by general economic conditions or a negative perception in the capital markets or the company’s financial condition or prospects, could adversely affect such company’s business. From time to time, severe competition may also affect the profitability of specialty finance and other financial
companies. Specialty finance and other financial companies are subject to rapid business changes, significant competition, value fluctuations
due to the concentration of loans in particular industries significantly affected by economic conditions (such as real
estate or energy) and volatile performance based upon the availability and cost of capital and prevailing interest rates. In addition, credit
and other losses resulting from the financial difficulties of borrowers or other third parties potentially may have an adverse effect
on companies in these industries.
Valuation Risk. The valuation of the Fund’s investments may carry more risk than that of traditional common stock. Uncertainties in the conditions of the financial market, unreliable reference data, lack of transparency
and inconsistency of valuation models and processes may lead to inaccurate asset pricing.
|
| Share Price |
$ 3.85
|
| NAV Per Share |
$ 4.39
|
| Latest Premium (Discount) to NAV [Percent] |
(12.30%)
|
| Capital Stock, Long-Term Debt, and Other Securities [Abstract] |
|
| Outstanding Security, Title [Text Block] |
Common Shares outstanding (unlimited number of Common Shares has been authorized)
|
| Outstanding Security, Held [Shares] | shares |
14,367,591
|
| Document Period End Date |
May 31, 2024
|
| Business Development Company B D C Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Business Development Company (“BDC”) Risk. The Fund invests in closed-end funds that have elected to be treated as BDCs. Investments in BDCs may be subject to a high degree of risk. BDCs typically invest
in small and medium-sized private and certain public companies that may not have access to public equity markets or capital raising,
and investments in these companies present a greater risk of loss due to the companies’ youth and limited track record. BDCs are also generally more susceptible to competition and economic and market changes due to limited products and market shares. A BDC’s portfolio could include a substantial amount of securities purchased in private placements, and its portfolio may carry risks similar
to those of a private equity or venture capital fund. Securities that are not publicly registered may be difficult to value and may be difficult
to sell at a price representative of their intrinsic value. Investments in BDCs are subject to various risks, including management’s ability to meet the BDC’s investment objective, and to manage the BDC’s portfolio when the underlying securities are redeemed or sold, during periods of market turmoil and as investors’ perceptions regarding a BDC or its underlying investments change. Certain BDCs in
which the Fund invests employ the use of leverage in their portfolios through borrowings or in the issuance of preferred stock.
While leverage often serves to increase the yield of a BDC, the leverage also subjects the BDC to increased risks, including the likelihood
of increased volatility and the possibility that the BDC’s common share income will fall if the dividend rate on any preferred shares or the interest rate on any borrowings rises. In addition, the market price for BDCs, together with other dividend paying stocks, may
be negatively affected by a rise in interest rates. Alternatively, declining interest rates could adversely impact the earnings of BDCs
in which the Fund invests, as new loan originations would likely be made at lower yields. BDC shares are not redeemable at the option
of the BDC shareholder and, as with shares of other closed-end funds, they may trade in the secondary market at a discount to their NAV.
|
| Current Market Conditions Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Current Market Conditions Risk. 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. As a means to fight inflation,
which remains at elevated levels, the Federal Reserve and certain foreign central banks have raised interest rates and expect to
continue to do so, and the Federal Reserve has announced that it intends to reverse previously implemented quantitative easing. U.S.
regulators have proposed several changes to market and issuer regulations which would directly impact the Fund, and any regulatory changes could adversely impact the Fund’s ability to achieve its investment strategies or make certain investments. Recent and
potential future bank failures could result in disruption to the broader banking industry or markets generally and reduce confidence
in financial institutions and the economy as a whole, which may also heighten market volatility and reduce liquidity. The ongoing
adversarial political climate in the United States, as well as political and diplomatic events both domestic and abroad, have and may
continue to have an adverse impact the U.S. regulatory landscape, markets and investor behavior, which could have a negative impact on the Fund’s investments and operations. Other unexpected political, regulatory and diplomatic events within the U.S. and abroad
may affect investor and consumer confidence and may adversely impact financial markets and the broader economy. For example, ongoing
armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other kilitant groups in the Middle
East, have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe,
the Middle East and the United States. The hostilities and sanctions resulting from those hostilities have and could continue
to have a significant impact on certain Fund investments as well as Fund performance and liquidity. The economies of the United
States and its trading partners, as well as the financial markets generally, may be adversely impacted by trade disputes and other
matters. For example, the United States has imposed trade barriers and restrictions on China. In addition, the Chinese government
is engaged in a longstanding dispute with Taiwan, continually threatening an invasion. If the political climate between the
United States and China does not improve or continues to deteriorate, if China were to attempt invading Taiwan, or if other geopolitical
conflicts develop or worsen, economies, markets and individual securities may be adversely affected, and the value of the Fund’s assets may go down. The COVID-19 global
pandemic, or any future public health crisis, and the ensuing policies enacted by
governments and central banks have caused and may continue to cause significant volatility and uncertainty in global financial markets,
negatively impacting global growth prospects. While vaccines have been developed, there is no guarantee that vaccines will be effective
against emerging future variants of the disease. As this global pandemic illustrated, such events may affect certain geographic
regions, countries, sectors and industries more significantly than others. Advancements in technology may also adversely impact markets
and the overall performance of the Fund. For instance, the economy may be significantly impacted by the advanced development
and increased regulation of artificial intelligence. These events, and any other future events, may adversely affect the prices and liquidity of the Fund’s portfolio investments and could result in disruptions in the trading markets.
|
| Cyber Security Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Cyber Security Risk. The Fund is susceptible to potential operational risks through breaches in cyber
security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund
to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Fund to incur
regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss.
Cyber security breaches may involve unauthorized access to the Fund’s digital information systems through “hacking” or malicious software coding, but may also result from outside attacks such as denial-of-service attacks through efforts to make network
services unavailable to intended users. In addition, cyber security breaches of the Fund’s third-party service providers, such as its administrator, transfer agent, custodian, or sub-advisor, as applicable, or issuers in which the Fund invests, can also subject
the Fund to many of the same risks associated with direct cyber security breaches. The Fund has established risk management systems designed
to reduce the risks associated with cyber security. However, there is no guarantee that such efforts will succeed, especially
because the Fund does not directly control the cyber security systems of issuers or third party service providers. Substantial costs may
be incurred by the Fund in order to resolve or prevent cyber incidents in the future.
|
| Financial Sector Concentration Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Financial Sector Concentration Risk. Under normal market conditions, the Fund concentrates its investments (i.e., invests
at least 25% of its total assets) in securities of companies within industries in the financial
sector. A fund concentrated in a single industry or sector is likely to present more risks than a fund that is broadly diversified over
several industries or groups of industries. Compared to the broad market, an individual sector may be more strongly affected by changes in
the economic climate, broad market shifts, moves in a particular dominant stock, or regulatory changes. Specialty finance and other
financial companies in general are subject to extensive government regulation, which may change frequently. The profitability of
specialty finance and other financial companies is largely dependent upon the availability and cost of capital funds, and may fluctuate
significantly in response to changes in interest rates, as well as changes in general economic conditions. From time to time, severe
competition may also affect the profitability of specialty finance and other financial companies. Financial companies can be highly
dependent upon access to capital markets and any impediments to such access, such as general economic conditions or a negative perception in the capital markets of a company’s financial condition or prospects, could adversely affect its business. Leasing companies
may be negatively impacted by changes in tax laws which affect the types of transactions in which such companies engage.
|
| Illiquid Securities Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Illiquid Securities Risk. The Fund may invest in securities that are considered to be illiquid securities.
Illiquid securities may be difficult to dispose of at a fair price at the times when the Fund believes it is
desirable to do so. The market price of illiquid securities generally is more volatile than that of more liquid securities, which may adversely
affect the price that the Fund pays for or recovers upon the sale of such securities. Illiquid securities are also more difficult to value,
especially in challenging markets.
|
| Income And Interest Rate Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Income and Interest Rate Risk. The income common shareholders receive from the Fund is based primarily on the dividends
and interest it earns from its investments, which can vary widely over the short and long-term.
If prevailing market interest rates drop, distribution rates of the Fund’s portfolio holdings may decline which then may adversely affect the Fund’s distributions on its common shares as well. The Fund’s income also would likely be adversely affected when prevailing short-term interest rates increase and the Fund is utilizing leverage.
|
| Leverage Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Leverage Risk. The use of leverage by the Fund can magnify the effect of any losses. If the income
and gains from the securities and investments purchased with leverage proceeds do not cover the cost of leverage, the
return to the common shares will be less than if leverage had not been used. Leverage involves risks and special considerations for
common shareholders including: (i) the likelihood of greater volatility of net asset value and market price of the common shares than
a comparable portfolio without leverage; (ii) the risk that fluctuations in interest rates on borrowings will reduce the return to the
common shareholders or will result in fluctuations in the dividends paid on the common shares; (iii) in a declining market, the use of leverage
is likely to cause a greater decline in the net asset value of the common shares than if the Fund were not leveraged, which may result
in a greater decline in the market price of the common shares; and (iv) when the Fund uses certain types of leverage, the investment
advisory fee payable to the Advisor and by the Advisor to the Sub-Advisor will be higher than if the Fund did not use leverage. To
the extent the Fund uses leverage and invests in BDCs that also use leverage, the risks associated with leverage will be magnified,
potentially significantly.
|
| Management Risk And Reliance On Key Personnel [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Management Risk and Reliance on Key Personnel. The implementation of the Fund’s investment strategy depends upon the continued contributions of certain key employees of the Advisor and Sub-Advisor, some
of whom have unique talents and experience
and would be difficult to replace. The loss or interruption of the services of a key
member of the portfolio management team could have a negative impact on the Fund.
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| Market Discount From New Asset Value [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
Market Discount from Net Asset Value. Shares of closed-end investment companies such as the Fund frequently trade at a
discount from their net asset value. The Fund cannot predict whether its common shares will
trade at, below or above net asset value.
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| Market Risk [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
Market Risk. Investments held by the Fund, as well as shares of the Fund itself, are subject
to market fluctuations caused by real or perceived adverse economic conditions, political events, regulatory factors or market
developments, changes in interest rates and perceived trends in securities prices. Shares of the Fund could decline in value or
underperform other investments as a result of the risk of loss associated with these market fluctuations. In addition, local, regional or
global events such as war, acts of terrorism, market manipulation, government defaults, government shutdowns, regulatory actions, political
changes, diplomatic developments, the imposition of sanctions and other similar measures, spread of infectious diseases
or other public health issues, recessions, or other events could have a significant negative impact on the Fund and its investments. Any
of such circumstances could have a materially negative impact on the value of the Fund’s shares, the liquidity of an investment, and result in increased market volatility. During any such events, the Fund’s shares may trade at increased premiums or discounts to their net asset value the bid/ask spread on the Fund’s shares may widen and the returns on investment may fluctuate.
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| Operational Risk [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
Operational
Risk. The Fund is subject to risks arising from
various operational factors, including, but not limited to, human error, processing
and communication errors, errors of the Fund’s service providers, counterparties or other third-parties, failed or inadequate processes
and technology or systems failures. The Fund relies on third parties for a range of services, including custody. Any delay or failure
relating to engaging or maintaining such service providers may affect the Fund’s ability to meet its investment objective. Although
the Fund and the Advisor seek to reduce these operational risks through controls and procedures, there is no way to completely
protect against such risks.
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| Potential Conflicts Of Interest Risk [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
Potential Conflicts of Interest Risk. First Trust, Confluence and the portfolio managers have interests which may conflict
with the interests of the Fund. In particular, First Trust and Confluence currently manage
and may in the future manage and/or advise other investment funds or accounts with the same or substantially similar investment objective
and strategies as the Fund. In addition, while the Fund is using leverage, the amount of the fees paid to First Trust (and by First
Trust to Confluence) for investment advisory and management services are higher than if the Fund did not use leverage because the fees
paid are calculated based on managed assets. Therefore, First Trust and Confluence have a financial incentive to leverage the Fund.
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| R E I T Mortgage Related And Asset Backed Securities Risk [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
REIT, Mortgage-Related and Asset-Backed Securities Risk. Investing in REITs involves certain unique risks in addition to investing in the real estate industry in general. REITs are subject to interest rate
risk (especially mortgage REITs) and the risk of default by lessees or borrowers. An equity REIT may be affected by changes in the
value of the underlying properties owned by the REIT. A mortgage REIT may be affected by the ability of the issuers of its portfolio
of mortgages to repay their obligations. REITs whose underlying assets are concentrated in properties used by a particular industry
are also subject to risks associated with such industry. REITs may have limited financial resources, their securities may trade less
frequently and in a limited volume, and their securities may be subject to more abrupt or erratic price movements than larger company
securities.
In addition to REITs, the Fund may invest in a variety of other mortgage-related securities,
including commercial mortgage securities and other mortgage-backed instruments. Mortgage-related securities are susceptible
to adverse economic, political or regulatory events that affect the value of real estate. Mortgage-related securities are also significantly
affected by other factors such as borrower defaults, delinquencies, realized or liquidation losses and other shortfalls. Rising
interest rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates,
and may reduce the market value of the securities. In addition, mortgage-related securities are subject to prepayment risk, the risk
that borrowers may pay off their mortgages sooner than expected, particularly when interest rates decline. This can reduce the Fund’s returns because the Fund may have to reinvest that money at lower prevailing interest rates.
The Fund’s investments in other asset-backed securities are subject to risks similar to those associated with mortgage-backed securities, as well as additional risks associated with the nature of the assets and
the servicing of those assets. In general, mortgage-related securities and asset-backed securities are subject to credit risk,
extension risk, interest rate risk, liquidity risk and valuation risk.
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| Reorganization Risk [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
Reorganization Risk. The Board of Trustees of the Fund has approved the reorganization of the Fund into
AOD. If approved by shareholders, the transaction is anticipated to be consummated during 2024, subject
to the satisfaction of applicable regulatory requirements and approvals and customary closing conditions. There is no assurance
when or whether such approvals, or any other approvals required for the transaction, will be obtained. Under the terms of the proposed
transaction, shareholders of the Fund would receive shares of AOD, which has its own investment strategies, and thereafter cease
to be a shareholder of the Fund. More information on the proposed transaction, including the risks and considerations associated with
the transaction as well as the risks of investing in
AOD, is contained in registration statement/proxy materials. Shareholders should refer
to such registration statement/proxy materials, which are available at https://www.ftportfolios.com/LoadContent/gohdcqj3gy4y.
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| Speciality Finance And Other Financial Companies Risks [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
Specialty Finance and Other Financial Companies Risks. The profitability of specialty finance and other financial companies in which the Fund may invest is largely dependent upon the availability and cost of capital,
and may fluctuate significantly in response to changes in interest rates, as well as changes in general economic conditions. Any
impediments to a specialty finance or other financial company’s access to capital markets, such as those caused by general economic conditions or a negative perception in the capital markets or the company’s financial condition or prospects, could adversely affect such company’s business. From time to time, severe competition may also affect the profitability of specialty finance and other financial
companies. Specialty finance and other financial companies are subject to rapid business changes, significant competition, value fluctuations
due to the concentration of loans in particular industries significantly affected by economic conditions (such as real
estate or energy) and volatile performance based upon the availability and cost of capital and prevailing interest rates. In addition, credit
and other losses resulting from the financial difficulties of borrowers or other third parties potentially may have an adverse effect
on companies in these industries.
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| Valuation Risk [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
Valuation Risk. The valuation of the Fund’s investments may carry more risk than that of traditional common stock. Uncertainties in the conditions of the financial market, unreliable reference data, lack of transparency
and inconsistency of valuation models and processes may lead to inaccurate asset pricing.
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