First Trust Health Care AlphaDEX® Fund (FXH)

Overview

The First Trust Health Care AlphaDEXu00ae Fund (FXH) seeks investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the StrataQuantu00ae Health Care Index. The fund uses the AlphaDEXu00ae methodology to select and weight stocks from the health care sector, aiming for superior risk-adjusted returns.

Reputation and Reliability

First Trust is a well-established ETF provider known for its innovative and rules-based investment strategies.

Management Expertise

First Trust has a dedicated team of investment professionals with expertise in quantitative analysis and ETF management.

Goal

To provide investment results that correspond generally to the price and yield, before fees and expenses, of the StrataQuantu00ae Health Care Index.

Investment Approach and Strategy

Strategy: The fund employs a quantitative, rules-based approach to select and weight health care stocks based on growth factors and value factors.

Composition The ETF holds a diversified portfolio of U.S. health care stocks, including pharmaceuticals, biotechnology, health care equipment, and health care providers & services.

Market Share: FXH's market share is moderate within the health care ETF sector.

Total Net Assets (AUM): 1312751281.71

Key Competitors

• Health Care Select Sector SPDRu00ae Fund (XLV)
• iShares U.S. Healthcare ETF (IYH)
• Vanguard Health Care ETF (VHT)

Competitive Landscape

The health care ETF market is highly competitive, with several large players. FXH's AlphaDEXu00ae strategy offers a differentiated approach compared to market-cap weighted ETFs like XLV and VHT, potentially leading to outperformance but also increased volatility. XLV has the advantage of larger AUM and higher liquidity, while VHT offers lower expense ratio. IYH offers broad exposure to the US Healthcare sector.

Historical Performance: Historical performance data should be reviewed for various time periods (1-year, 3-year, 5-year, 10-year) to understand the fund's track record.

Benchmark Comparison: The fund's performance should be compared against the S&P 500 Health Care Sector index or a similar benchmark to assess its relative performance.

Expense Ratio: 0.61

Average Trading Volume

The average trading volume for FXH is moderate, which may affect the ease of buying and selling shares.

Bid-Ask Spread

The bid-ask spread is generally tight, reflecting decent liquidity, but can widen during periods of market volatility.

Market Environment Factors

Economic indicators, healthcare policy changes, and pharmaceutical industry trends significantly impact FXH's performance. Healthcare spending, technological advancements, and regulatory approvals also influence market dynamics.

Growth Trajectory

FXH's growth trajectory depends on the overall performance of the healthcare sector and the effectiveness of its AlphaDEXu00ae strategy in selecting and weighting stocks. Any changes to the AlphaDEX methodology could impact future performance.

Competitive Edge

FXH's competitive advantage lies in its AlphaDEXu00ae methodology, which aims to identify and overweight undervalued stocks with strong growth potential. This approach seeks to outperform traditional market-cap weighted indices. However, this strategy relies heavily on the effectiveness of the AlphaDEX methodology which could expose FXH to potentially increased volatility. The fund's targeted approach and systematic rebalancing process differentiates it from other healthcare ETFs.

Volatility

FXH's volatility may be higher than broader market or market-cap weighted healthcare ETFs due to its stock selection methodology.

Market Risk

The fund is subject to market risk, particularly related to the healthcare sector. This includes risks associated with government regulations, patent expirations, and changing healthcare trends.

Ideal Investor Profile

FXH is suitable for investors seeking targeted exposure to the health care sector with a focus on potential outperformance through a quantitative stock selection strategy.

Market Risk

FXH is best suited for investors with a moderate to high-risk tolerance and a longer-term investment horizon.

The First Trust Health Care AlphaDEXu00ae Fund (FXH) offers a unique approach to investing in the health care sector by using a quantitative stock selection methodology. FXH seeks to outperform traditional market-cap weighted indices by identifying undervalued stocks with strong growth potential. However, the AlphaDEX strategy may increase volatility, making it suitable for investors with a higher risk tolerance and a longer investment horizon. Investors should carefully consider their investment objectives and risk tolerance before investing in this ETF.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investments in ETFs are subject to risk, including the possible loss of principal.