First Trust Emerging Markets Small Cap AlphaDEX® Fund (FEMS)

Overview

The First Trust Emerging Markets Small Cap AlphaDEXu00ae Fund (FEMS) seeks investment results that correspond to the performance of the NASDAQ AlphaDEXu00ae Emerging Markets Small Cap Index. It focuses on emerging market small-cap stocks selected and weighted based on growth factors.

Reputation and Reliability

First Trust is a well-established ETF issuer known for its AlphaDEXu00ae methodology and a wide range of thematic and factor-based ETFs.

Management Expertise

First Trust has a dedicated team of investment professionals with experience in managing ETFs and quantitative investment strategies.

Goal

To provide investment results that correspond to the price and yield, before fees and expenses, of the NASDAQ AlphaDEXu00ae Emerging Markets Small Cap Index.

Investment Approach and Strategy

Strategy: The fund uses the AlphaDEXu00ae methodology, which selects and weights stocks based on growth and value factors, aiming to outperform traditional market-cap weighted indexes.

Composition The ETF holds a diversified portfolio of small-cap stocks from emerging market countries, with allocations adjusted based on the AlphaDEXu00ae methodology.

Market Share: The market share of FEMS within the emerging markets small-cap ETF category is moderate.

Total Net Assets (AUM): 34167828

Key Competitors

• iShares MSCI Emerging Markets Small-Cap ETF (EEMS)
• SPDR S&P Emerging Markets Small Cap ETF (EWX)
• Vanguard FTSE Emerging Markets ETF (VWO)

Competitive Landscape

The emerging markets small-cap ETF space is competitive, with iShares and SPDR offering similar funds with different methodologies. FEMS utilizes the AlphaDEXu00ae methodology, which selects stocks based on growth and value factors, potentially leading to different performance outcomes compared to market-cap weighted ETFs. This approach can be an advantage during certain market cycles but may underperform during others. Lower expense ratio is the advantage of competitor.

Historical Performance: Historical performance data should be sourced from financial data providers for different time periods (e.g., 1-year, 3-year, 5-year, 10-year).

Benchmark Comparison: The ETF's performance should be compared to the NASDAQ AlphaDEXu00ae Emerging Markets Small Cap Index to assess its tracking effectiveness.

Expense Ratio: 0.68

Average Trading Volume

Average trading volume for FEMS is moderate, which can affect the ease of buying and selling shares.

Bid-Ask Spread

The bid-ask spread for FEMS is typically reasonable, but it can widen during periods of market volatility.

Market Environment Factors

Economic growth in emerging markets, global trade conditions, and currency fluctuations significantly impact FEMS.

Growth Trajectory

Growth is tied to the performance of emerging markets small-cap companies and the effectiveness of the AlphaDEXu00ae methodology.

Competitive Edge

FEMS's primary competitive advantage is its AlphaDEXu00ae methodology, which uses a quantitative approach to select and weight stocks based on growth and value factors. This may provide the opportunity for higher returns compared to passively managed, market-cap weighted ETFs. However, this also introduces complexity and the potential for underperformance if the factors are not aligned with market conditions. The expense ratio can also affect the overall return.

Volatility

FEMS's volatility is expected to be high due to its focus on small-cap stocks in emerging markets.

Market Risk

The ETF is exposed to market risk in emerging markets, including political instability, currency risk, and regulatory changes.

Ideal Investor Profile

The ideal investor is someone seeking exposure to emerging markets small-cap stocks with a higher risk tolerance.

Market Risk

FEMS is best suited for long-term investors who are comfortable with emerging market risks and understand the AlphaDEXu00ae methodology.

The First Trust Emerging Markets Small Cap AlphaDEXu00ae Fund (FEMS) offers exposure to emerging markets small-cap equities using a unique AlphaDEXu00ae methodology that selects and weights stocks based on growth and value factors. This strategy aims to outperform traditional market-cap weighted indexes but also introduces complexity and potential underperformance. FEMS carries higher risk due to its focus on emerging markets and small-cap stocks. It is suitable for long-term investors with a higher risk tolerance seeking diversified exposure to emerging markets.

Data Sources:

• First Trust Website
• Morningstar
• ETFdb.com
• Bloomberg

Disclaimers:

The information provided is for informational purposes only and should not be considered investment advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions. Market share data is estimated and may not be precise.