First Trust Utilities AlphaDEX® Fund (FXU)

Overview

The First Trust Utilities AlphaDEXu00ae Fund (FXU) is an ETF that seeks investment results that correspond generally to the price and yield of an equity index called the StrataQuantu00ae Utilities Index. The fund utilizes an enhanced indexing methodology to identify and weight securities in the utilities sector that may generate alpha relative to traditional market capitalization-weighted indices.

Reputation and Reliability

First Trust is a well-established ETF provider with a reputation for innovation and a broad range of investment products.

Management Expertise

First Trust Advisors L.P. has a team of experienced investment professionals managing their ETF products.

Goal

The primary investment objective of FXU is to seek investment results that correspond generally to the price and yield of the StrataQuantu00ae Utilities Index.

Investment Approach and Strategy

Strategy: FXU uses the AlphaDEXu00ae methodology which ranks securities within the utilities sector based on growth factors including sales growth, price appreciation and momentum, and value factors including book value to price, cash flow to price and return on assets.

Composition The fund primarily holds common stocks of U.S. companies in the utilities sector, focusing on those ranked highest by the AlphaDEXu00ae methodology.

Market Share: FXU's market share in the utilities ETF sector varies and depends on the period, but it is a moderate player in the utilities ETF market.

Total Net Assets (AUM): 1107000000

Key Competitors

• XLU
• VPU
• IDU

Competitive Landscape

The utilities ETF market is competitive, with XLU dominating the sector. FXU's AlphaDEXu00ae methodology differentiates it from market cap-weighted competitors, potentially offering higher returns but also introducing different risks. FXU may attract investors seeking a more actively managed approach within the utilities sector, whereas competitors often offer broader, passive exposure.

Historical Performance: Historical performance data is dependent on the time period analyzed. Refer to official fund factsheets for specific data.

Benchmark Comparison: FXU's performance should be compared against the StrataQuantu00ae Utilities Index and major utilities ETFs like XLU.

Expense Ratio: 0.62

Average Trading Volume

FXU's average trading volume is moderate, providing sufficient liquidity for most investors.

Bid-Ask Spread

The bid-ask spread for FXU is typically tight, reflecting adequate liquidity.

Market Environment Factors

Economic indicators, interest rate changes, and regulatory shifts within the utilities sector influence FXU's performance. Factors include demand for utility services, commodity prices (e.g., natural gas), and government policies related to energy and infrastructure.

Growth Trajectory

FXU's growth trajectory depends on the performance of its AlphaDEXu00ae methodology relative to broader utilities indices. Strategy adjustments are based on ranking and rebalancing, designed to increase returns.

Competitive Edge

FXU's competitive edge lies in its AlphaDEXu00ae methodology, which actively selects and weights securities based on growth and value factors, potentially outperforming market-cap weighted indices. This strategy aims to identify undervalued stocks with strong growth potential, offering an alternative to passive utilities ETFs. The fund's active management approach allows it to adapt to changing market conditions and potentially capitalize on opportunities in the utilities sector. It targets higher returns than a market-cap weighted approach, although it carries increased risk.

Volatility

FXU's volatility may be higher than market cap-weighted utilities ETFs due to its active selection process.

Market Risk

FXU is subject to market risk, including risks specific to the utilities sector such as regulatory changes, commodity price fluctuations, and interest rate sensitivity.

Ideal Investor Profile

The ideal investor is someone seeking exposure to the utilities sector with a preference for active management and potential alpha generation.

Market Risk

FXU is suitable for investors seeking long-term capital appreciation in the utilities sector who are comfortable with moderate risk.

The First Trust Utilities AlphaDEXu00ae Fund (FXU) provides exposure to the utilities sector through an actively managed, enhanced indexing strategy. Its AlphaDEXu00ae methodology aims to outperform traditional market-cap weighted indices, focusing on growth and value factors. While it offers the potential for higher returns, it also comes with a higher expense ratio and increased volatility compared to passive alternatives. This makes it suitable for investors with a specific investment objective and risk tolerance within the utilities sector.

Data Sources:

• First Trust Website
• ETF.com
• Bloomberg
• 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. Consult with a qualified financial advisor before making any investment decisions.