First Trust Consumer Discretionary AlphaDEX® Fund (FXD)

Overview

The First Trust Consumer Discretionary AlphaDEXu00ae Fund (FXD) seeks investment results that correspond to the price and yield (before the Fund's fees and expenses) of an equity index called the StrataQuantu00ae Consumer Discretionary Index. The fund focuses on consumer discretionary stocks, utilizing the AlphaDEXu00ae methodology which aims to select stocks based on growth factors.

Reputation and Reliability

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

Management Expertise

First Trust has a dedicated team of investment professionals with experience in developing and managing various ETF products.

Goal

The fund aims to provide investment results that correspond generally to the price and yield, before fees and expenses, of the StrataQuantu00ae Consumer Discretionary Index.

Investment Approach and Strategy

Strategy: The fund does not seek to track a specific traditional market-cap weighted index. Instead, it uses the AlphaDEXu00ae methodology, which ranks stocks based on growth and value factors to create an index.

Composition The fund primarily holds stocks of US consumer discretionary companies.

Market Share: FXD's market share within the consumer discretionary ETF segment is modest but competitive.

Total Net Assets (AUM): 450800000

Key Competitors

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

Competitive Landscape

The consumer discretionary ETF market is highly competitive, dominated by ETFs like XLY and VCR. FXD differentiates itself through its AlphaDEXu00ae methodology. However, its AUM is much smaller than those of XLY and VCR, meaning its market share is smaller, creating a disadvantage. Its advantage lies in its smart beta strategy.

Historical Performance: Historical performance data is not provided in this response, but can be looked up on financial websites.

Benchmark Comparison: Benchmark comparison data is not provided in this response, but can be looked up on financial websites.

Expense Ratio: 0.63

Average Trading Volume

FXD exhibits moderate liquidity with an average daily trading volume that provides reasonable ease of entry and exit for investors.

Bid-Ask Spread

The bid-ask spread for FXD is generally competitive, reflecting its moderate trading volume and efficiency in the market.

Market Environment Factors

Economic indicators such as consumer confidence, disposable income, and interest rates heavily influence the consumer discretionary sector and, therefore, FXD's performance. Sector growth prospects and overall market conditions also play a significant role.

Growth Trajectory

FXD's growth trajectory is tied to the performance of the consumer discretionary sector and the success of its AlphaDEXu00ae methodology. Changes to strategy and holdings are regular as per the AlphaDEXu00ae rules.

Competitive Edge

FXD's competitive edge lies in its differentiated AlphaDEXu00ae methodology, which aims to identify stocks with strong growth and value characteristics. This approach distinguishes it from traditional market-cap weighted ETFs. The AlphaDEXu00ae selection process provides a systematic approach to stock selection. However, the fund's relatively smaller AUM compared to larger competitors poses a challenge. First Trustu2019s reputation also lends credibility.

Volatility

Historical volatility data is not provided in this response, but can be looked up on financial websites, which can be used to assess FXD's volatility.

Market Risk

FXD is exposed to market risk, particularly related to the consumer discretionary sector. Economic downturns or changes in consumer spending habits could negatively impact the fund's performance.

Ideal Investor Profile

The ideal investor for FXD is someone seeking exposure to the consumer discretionary sector with a preference for a smart beta strategy and a higher risk tolerance.

Market Risk

FXD is best suited for long-term investors who are comfortable with sector-specific exposure and the potential for higher volatility.

The First Trust Consumer Discretionary AlphaDEXu00ae Fund (FXD) offers exposure to the US consumer discretionary sector through its AlphaDEXu00ae methodology. This investment strategy attempts to select companies based on growth and value factors, differentiating it from market-cap-weighted ETFs. It suits investors who are looking for an alternative approach to traditional sector investing and have a higher risk tolerance. However, it faces competition from larger ETFs in the consumer discretionary market and its performance is dependent on the success of the AlphaDEXu00ae approach.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

The information provided is for informational purposes only and should not be considered investment advice. Investment decisions should be made based on individual circumstances and consultation with a financial advisor. Market data and ETF information are subject to change.