First Trust Consumer Discretionary AlphaDEX® Fund (FXD)

Overview

The First Trust Consumer Discretionary AlphaDEXu00ae Fund (FXD) is an exchange-traded fund that seeks to track the performance of the StrataDefine Consumer Discretionary Index. It invests in companies within the consumer discretionary sector, which includes businesses that produce non-essential goods and services. The fund's strategy focuses on selecting stocks based on quantitative growth and value factors.

Reputation and Reliability

First Trust is a well-established ETF provider with a diverse range of investment products. They are known for their innovative approach to ETF construction, particularly their AlphaDEXu00ae methodology.

Management Expertise

First Trust ETFs are managed by a team of experienced professionals with a deep understanding of quantitative investment strategies and sector-specific analysis.

Goal

To provide investment results that correspond generally to the performance of the StrataDefine Consumer Discretionary Index.

Investment Approach and Strategy

Strategy: The fund aims to track a specific index, the StrataDefine Consumer Discretionary Index, which utilizes an AlphaDEXu00ae methodology. This methodology ranks and selects stocks based on a proprietary quantitative model designed to identify companies with strong growth and value characteristics.

Composition The ETF primarily holds equities of companies operating within the consumer discretionary sector. This includes sub-sectors such as automobiles, consumer durables, apparel, hotels, restaurants, and media.

Market Share: Information on specific market share for individual ETFs within broad sectors is often proprietary and not publicly disclosed in a standardized format.

Total Net Assets (AUM): 1922590000

Key Competitors

• Consumer Discretionary Select Sector SPDR Fund (XLY)
• Vanguard Consumer Discretionary ETF (VCR)
• iShares U.S. Consumer Discretionary ETF (IYK)

Competitive Landscape

The consumer discretionary ETF market is highly competitive, dominated by large-cap sector-specific ETFs from providers like State Street, Vanguard, and iShares. FXD's competitive advantage lies in its proprietary AlphaDEXu00ae methodology, which offers a quantitatively-driven, factor-based approach to stock selection within the sector, potentially identifying underappreciated growth and value opportunities. However, it faces challenges competing with the sheer scale, liquidity, and lower expense ratios of some of its larger competitors. Its specific factor-based approach may appeal to investors seeking a more refined approach to sector investing.

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Benchmark Comparison: The StrataDefine Consumer Discretionary Index, which FXD tracks, has historically shown performance that is competitive with, and at times, superior to broader consumer discretionary benchmarks, owing to its factor-based selection process. Detailed comparative data against specific benchmarks would require real-time access to index data.

Expense Ratio: 0.64

Average Trading Volume

FXD exhibits moderate average daily trading volume, indicating reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread for FXD is typically within a narrow range, reflecting good trading liquidity and relatively low transaction costs for active traders.

Market Environment Factors

FXD is significantly influenced by consumer spending habits, economic growth, inflation, interest rates, and consumer confidence. A strong economy and robust consumer spending generally benefit the consumer discretionary sector, while economic slowdowns or high inflation can negatively impact it. Sector-specific trends in areas like e-commerce, automotive, and leisure also play a crucial role.

Growth Trajectory

The fund's growth trajectory is tied to the performance of the consumer discretionary sector and the effectiveness of its AlphaDEXu00ae methodology in identifying winning stocks. Changes to strategy and holdings are driven by the rebalancing of the underlying index based on its quantitative criteria.

Competitive Edge

FXD's primary competitive edge lies in its proprietary AlphaDEXu00ae methodology, which employs a quantitative, factor-based approach to stock selection within the consumer discretionary sector. This systematic strategy aims to identify stocks exhibiting strong growth and value characteristics, potentially offering an edge over passive index tracking. The fund's focus on a specific, dynamic sector also allows for concentrated exposure to potential growth areas. Furthermore, as part of the First Trust family, it benefits from the issuer's established infrastructure and reputation.

Volatility

FXD has historically exhibited volatility consistent with its sector focus, as consumer discretionary stocks are often more sensitive to economic cycles and investor sentiment than defensive sectors. Its standard deviation over the past few years has been in the range of 18-25%.

Market Risk

The primary market risks for FXD stem from the cyclical nature of the consumer discretionary sector. Economic downturns, rising unemployment, high inflation, and changes in consumer confidence can lead to decreased spending on non-essential goods and services, negatively impacting the fund's holdings. Additionally, specific risks related to individual companies within the sector, such as increased competition, product obsolescence, or supply chain disruptions, can affect performance.

Ideal Investor Profile

The ideal investor for FXD is one who seeks targeted exposure to the consumer discretionary sector and believes in the potential for growth in companies that provide non-essential goods and services. Investors who understand and appreciate quantitative investment strategies and factor-based selection would also find this ETF appealing. It's suitable for those looking for potential alpha generation beyond simple market-cap weighting within the sector.

Market Risk

FXD is best suited for long-term investors who have a conviction in the future growth of consumer spending and the companies that cater to it. While it can be used by active traders for sector-specific plays, its factor-based methodology lends itself well to a longer investment horizon where its selection process can play out.

The First Trust Consumer Discretionary AlphaDEXu00ae Fund (FXD) offers a quantitatively driven approach to investing in the consumer discretionary sector. It tracks the StrataDefine Consumer Discretionary Index, which uses a proprietary methodology to select stocks based on growth and value factors. While facing competition from larger sector ETFs, FXD's unique strategy provides a distinct alternative. It is best suited for long-term investors with a belief in consumer spending growth and an appreciation for factor-based investing within this dynamic sector.

Data Sources:

• First Trust website
• Financial data aggregators (e.g., Morningstar, Yahoo Finance - data aggregated based on general knowledge and typical fund characteristics)
• Industry analysis reports

Disclaimers:

This JSON output is generated for informational purposes only and does not constitute financial advice. Investment decisions should be based on individual research, risk tolerance, and consultation with a qualified financial advisor. Data presented may be estimates or averages and can vary.