First Trust Consumer Staples AlphaDEX® Fund (FXG)

Overview

The First Trust Consumer Staples AlphaDEXu00ae Fund (FXG) is an exchange-traded fund that seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the StrataQuantu00ae Consumer Staples Index. It focuses on consumer staples companies in the US, employing a modified equal-dollar weighted approach to potentially outperform traditional market-cap weighted indexes.

Reputation and Reliability

First Trust is a well-established ETF provider known for its innovative and actively managed ETFs. They have a solid track record in the market.

Management Expertise

First Trust has a team of experienced investment professionals who manage a variety of ETFs across different asset classes and sectors.

Goal

To seek investment results that correspond generally to the price and yield, before fees and expenses, of the StrataQuantu00ae Consumer Staples Index.

Investment Approach and Strategy

Strategy: The fund uses a quantitative, rules-based approach to select and weight consumer staples stocks. It does not track a traditional market-cap weighted index but instead uses the AlphaDEX methodology.

Composition The ETF primarily holds stocks of US consumer staples companies. The exact holdings vary based on the index's methodology.

Market Share: FXG holds a moderate market share within the consumer staples ETF segment.

Total Net Assets (AUM): 165400000

Key Competitors

• Consumer Staples Select Sector SPDR Fund (XLP)
• Vanguard Consumer Staples ETF (VDC)
• iShares U.S. Consumer Staples ETF (IYK)

Competitive Landscape

The consumer staples ETF market is dominated by a few large, market-cap weighted funds. FXG differentiates itself through its AlphaDEX methodology, aiming for potentially higher returns but also introducing potentially higher volatility. Its modified equal-dollar weighting contrasts with the capitalization-weighted strategies of competitors XLP and VDC, potentially offering more exposure to smaller companies. The fund's expense ratio is also generally higher than that of XLP and VDC.

Historical Performance: Historical performance data is available from various financial data providers.

Benchmark Comparison: The ETF's performance should be compared to the StrataQuantu00ae Consumer Staples Index to evaluate its tracking effectiveness.

Expense Ratio: 0.63

Average Trading Volume

The ETF exhibits moderate liquidity, suitable for most investors.

Bid-Ask Spread

The bid-ask spread is generally tight, indicating relatively low trading costs.

Market Environment Factors

Economic conditions, interest rates, inflation, and consumer spending patterns can affect the consumer staples sector and the ETF's performance.

Growth Trajectory

Growth depends on consumer behavior and the ability of the underlying companies to maintain profitability and adapt to changing consumer preferences. The fund's growth is also tied to the performance of its AlphaDEX methodology.

Competitive Edge

FXG's competitive edge lies in its AlphaDEX methodology, which aims to identify and select stocks with strong growth potential within the consumer staples sector. This strategy differentiates it from traditional market-cap weighted ETFs. The fund's modified equal-dollar weighting can provide exposure to smaller, potentially faster-growing companies that might be underrepresented in market-cap weighted funds. However, this strategy can also result in higher volatility and increased portfolio turnover.

Volatility

Due to its active selection and weighting strategy, FXG may exhibit higher volatility than passively managed, market-cap weighted consumer staples ETFs.

Market Risk

The ETF is subject to market risk, including the risk that the consumer staples sector may underperform the broader market. Company-specific risks also apply to the individual holdings.

Ideal Investor Profile

The ideal investor is one who seeks potentially higher returns from the consumer staples sector and is comfortable with a potentially higher level of volatility.

Market Risk

The ETF may be suitable for long-term investors seeking enhanced returns, but it's not recommended for risk-averse investors seeking stability and minimal tracking error.

The First Trust Consumer Staples AlphaDEXu00ae Fund (FXG) offers a differentiated approach to investing in the consumer staples sector through its proprietary AlphaDEX methodology. This strategy aims to outperform traditional market-cap weighted indexes by selecting and weighting stocks based on growth factors. While this approach may offer the potential for higher returns, it also introduces a higher level of volatility and may result in increased portfolio turnover. The fund is best suited for investors who understand and are comfortable with its active management style and associated risks.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar
• YCharts

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Investors should consult with a qualified financial advisor before making any investment decisions. Market share data is approximate and may vary slightly depending on the source and date.