First Trust Financials AlphaDEX® Fund (FXO)

Overview

The First Trust Financials AlphaDEXu00ae Fund (FXO) seeks investment results that correspond generally to the price and yield of the StrataQuantu00ae Financials Index. The fund employs an enhanced indexing strategy, selecting financial stocks based on growth factors including sales to price ratio, price appreciation, and sales growth, cash flow to price ratio, return on assets and return on equity.

Reputation and Reliability

First Trust is a well-established ETF provider with a solid track record. They are known for their AlphaDEXu00ae methodology, which aims to outperform traditional market-cap weighted indexes.

Management Expertise

First Trust Advisors L.P. has extensive experience in managing ETFs and other investment products, with a dedicated team focused on factor-based and strategic investment solutions.

Goal

To track the performance of the StrataQuantu00ae Financials Index, which selects and weights financials stocks based on growth and value factors.

Investment Approach and Strategy

Strategy: The fund uses a quantitative, rules-based approach to select and weight stocks within the financial sector, aiming to outperform traditional market-cap weighted indexes.

Composition The fund primarily holds stocks of financial companies, including banks, insurance companies, and investment firms.

Market Share: FXOu2019s market share is moderate within the financials ETF segment.

Total Net Assets (AUM): 258125088

Key Competitors

• XLF
• VFH
• KRE

Competitive Landscape

The financial ETF industry is highly competitive, with several large players dominating the market share. FXO's advantage lies in its AlphaDEXu00ae methodology, which aims to identify and overweight stocks with strong growth potential. However, its expense ratio is relatively higher compared to some of its competitors.

Historical Performance: Historical performance data is not provided but can be found on financial websites.

Benchmark Comparison: The ETF's performance can be compared to the StrataQuantu00ae Financials Index and other financial sector ETFs.

Expense Ratio: 0.62

Average Trading Volume

The average trading volume for FXO is moderate, indicating sufficient liquidity for most investors.

Bid-Ask Spread

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

Market Environment Factors

Economic growth, interest rates, and regulatory changes significantly impact the financial sector and, consequently, FXO's performance.

Growth Trajectory

The ETF's growth trajectory is tied to the performance of the financial sector and the effectiveness of the AlphaDEXu00ae methodology in selecting and weighting stocks.

Competitive Edge

FXO's competitive advantage lies in its proprietary AlphaDEXu00ae methodology, which seeks to identify undervalued stocks within the financial sector. This enhanced indexing approach aims to outperform traditional market-cap weighted indexes. The fund's focus on growth and value factors provides a differentiated approach. It offers exposure to a potentially higher-growth segment of the financial market, which may attract investors seeking alpha generation.

Volatility

FXO's volatility is generally in line with the financial sector, which can be sensitive to economic and interest rate changes.

Market Risk

The ETF is subject to market risk, as its performance is tied to the overall performance of the financial sector. Specific risks include interest rate risk, credit risk, and regulatory risk.

Ideal Investor Profile

FXO is suitable for investors seeking exposure to the financial sector with a focus on growth and value factors. It may appeal to those looking for an alternative to traditional market-cap weighted financial ETFs.

Market Risk

FXO is best suited for investors with a moderate risk tolerance and a long-term investment horizon. It may be suitable for both active traders and passive investors seeking enhanced returns within the financial sector.

The First Trust Financials AlphaDEXu00ae Fund (FXO) offers exposure to the financial sector using a unique AlphaDEXu00ae methodology. It seeks to outperform traditional market-cap weighted indexes by selecting stocks based on growth and value factors. The fund's expense ratio is relatively higher than some of its competitors, but its potential for enhanced returns may be appealing to some investors. It is suitable for investors with a moderate risk tolerance and a long-term investment horizon.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Market share and AUM data can change frequently. Please consult with a qualified financial advisor before making any investment decisions.