First Trust Large Cap Core AlphaDEX® Fund (FEX)

Overview

The First Trust Large Cap Core AlphaDEXu00ae Fund (FEX) is an ETF that seeks investment results that correspond to the performance of the NASDAQ AlphaDEXu00ae Large Cap Core Index. It employs a rules-based methodology to select and weight large-cap stocks, aiming for superior risk-adjusted returns.

Reputation and Reliability

First Trust is a well-established ETF provider with a reputation for innovative and actively managed ETFs.

Management Expertise

First Trust has a seasoned management team with expertise in quantitative investing and ETF management.

Goal

The fund seeks to track the investment results of an index composed of large capitalization U.S. equities. Select securities from the NASDAQ US 1000 Index based on growth factors including 3, 6, and 12 month price appreciation, sales to price and one year sales growth, plus value factors including book value to price, cash flow to price and return on assets.

Investment Approach and Strategy

Strategy: The fund does not track a traditional market-cap weighted index. Instead it uses the AlphaDEX methodology, selecting stocks based on growth and value factors.

Composition Primarily holds large-cap U.S. equities. It is rebalanced and reconstituted quarterly.

Market Share: FEX has a notable market share within the smart beta large-cap ETF category.

Total Net Assets (AUM): 2543000000

Key Competitors

• Invesco FTSE RAFI US 1000 ETF (PRF)
• Schwab Fundamental U.S. Large Company Index ETF (FNDX)
• WisdomTree U.S. Quality Dividend Growth Fund (DGRW)

Competitive Landscape

The smart beta ETF market is competitive, with several funds employing different methodologies to enhance returns. FEX's AlphaDEX methodology offers a distinct approach, potentially outperforming market-cap weighted indices but also introducing greater tracking error. Competitors may offer lower expense ratios or focus on different factors, which could be more appealing depending on investor preferences.

Historical Performance: Historical performance is measured by annual return. This needs to be pulled from public sources.

Benchmark Comparison: The fund's benchmark is the NASDAQ AlphaDEXu00ae Large Cap Core Index. Its performance should be compared against a traditional large-cap index like the S&P 500.

Expense Ratio: 0.62

Average Trading Volume

FEX exhibits moderate liquidity, facilitating easy trading for most investors.

Bid-Ask Spread

FEX typically has a competitive bid-ask spread, reflecting its generally efficient trading.

Market Environment Factors

Economic growth, interest rate changes, and market sentiment all affect FEX's performance. The fund's holdings are susceptible to macro-economic conditions.

Growth Trajectory

The growth trajectory is dependent on its ability to consistently outperform traditional large-cap indices. Rebalancing and reconstitution may create some churn.

Competitive Edge

FEX's competitive advantage lies in its AlphaDEX methodology, which aims to select and weight stocks based on both growth and value factors. This approach differentiates it from passive market-cap weighted ETFs and other smart beta funds that may focus solely on one factor. First Trust's established brand name and distribution network also contribute to its competitive positioning. The rules based nature of the Index reduces the chance of human error and bias.

Volatility

FEX may exhibit higher volatility than a traditional market-cap weighted index due to its active selection and weighting strategy.

Market Risk

The fund is exposed to market risk, which is the risk of declines in the overall stock market. Sector concentration and idiosyncratic risk from individual holdings also influence volatility.

Ideal Investor Profile

The ideal investor for FEX is someone seeking enhanced returns from large-cap equities through a rules-based approach. They should be comfortable with potentially higher volatility and tracking error compared to passive ETFs.

Market Risk

FEX is best for investors who are willing to take on moderately higher risk in exchange for potential outperformance. It is suited to long-term investors with a moderate risk tolerance.

First Trust Large Cap Core AlphaDEXu00ae Fund (FEX) is a smart beta ETF employing a rules-based methodology to select large-cap stocks based on both value and growth factors. It aims to outperform traditional market-cap weighted indices. It is well-diversified across sectors to mitigate sector-specific risk. While its AlphaDEX strategy offers the potential for higher returns, it also introduces increased volatility and tracking error. FEX may suit investors who are looking for a smart beta approach to enhance their returns from large-cap equities.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

The data provided is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.