First Trust Small Cap Growth AlphaDEX® Fund (FYC)

Overview

The First Trust Small Cap Growth AlphaDEXu00ae Fund (FTC) seeks investment results that correspond generally to the price and yield of an equity index called the NASDAQ AlphaDEXu00ae Small Cap Growth Index. It focuses on small-cap growth companies in the US, using the AlphaDEXu00ae methodology to select stocks based on growth factors.

Reputation and Reliability

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

Management Expertise

First Trust has a dedicated team of experienced portfolio managers and analysts specializing in quantitative and factor-based investing.

Goal

To track the NASDAQ AlphaDEXu00ae Small Cap Growth Index, which seeks to identify and select small-cap growth stocks with superior alpha potential.

Investment Approach and Strategy

Strategy: The fund does not track a market-cap weighted index. It uses the AlphaDEXu00ae selection methodology, which ranks stocks based on growth factors and then selects the highest-ranked stocks.

Composition The ETF primarily holds a diversified portfolio of small-cap US growth stocks across various sectors. Its composition is determined by the AlphaDEXu00ae methodology.

Market Share: FTC's market share is relatively small compared to broader small-cap ETFs.

Total Net Assets (AUM): 1338000000

Key Competitors

• IWO
• VBK
• IUSG

Competitive Landscape

The small-cap growth ETF market is highly competitive, with many ETFs tracking similar indices or using different selection methodologies. FTC's AlphaDEXu00ae methodology is a differentiator, potentially offering superior risk-adjusted returns compared to market-cap weighted ETFs. However, it may underperform in certain market environments.

Historical Performance: Historical performance varies depending on the time period and market conditions. Refer to official fund literature for specific historical data.

Benchmark Comparison: The ETF's performance should be compared to the NASDAQ AlphaDEXu00ae Small Cap Growth Index to assess its tracking effectiveness.

Expense Ratio: 0.6

Average Trading Volume

FTC's average trading volume indicates moderate liquidity, making it easy for most investors to buy and sell shares.

Bid-Ask Spread

The bid-ask spread is typically reasonable, reflecting the ETF's liquidity and accessibility.

Market Environment Factors

Economic growth, interest rate changes, and investor sentiment towards small-cap stocks influence FTC's performance. Sector-specific factors can also play a role.

Growth Trajectory

The fund's growth is tied to the performance of its underlying holdings. The AlphaDEXu00ae methodology is regularly rebalanced, leading to changes in holdings and sector allocations.

Competitive Edge

FTC's primary competitive advantage is its proprietary AlphaDEXu00ae methodology, which aims to identify and select small-cap growth stocks with superior alpha potential. The methodology uses a quantitative approach to rank stocks based on growth factors, providing a systematic and disciplined investment process. This approach may help the fund generate higher returns than passively managed small-cap growth ETFs. However, this strategy may result in higher turnover and increased transaction costs.

Volatility

Small-cap stocks tend to be more volatile than large-cap stocks, so FTC can experience higher volatility than the broader market.

Market Risk

FTC is exposed to market risk, meaning its value can decline due to overall market downturns. Specific risks associated with small-cap stocks include liquidity risk and company-specific risk.

Ideal Investor Profile

FTC is suitable for investors seeking exposure to small-cap growth stocks with the potential for above-average returns. It is best suited for investors with a moderate to high risk tolerance and a long-term investment horizon.

Market Risk

FTC is more suitable for long-term investors who are comfortable with higher volatility and can tolerate potential short-term losses. It may also appeal to active traders seeking to capitalize on short-term market trends.

The First Trust Small Cap Growth AlphaDEXu00ae Fund offers exposure to small-cap growth stocks through a unique AlphaDEXu00ae selection methodology. This quantitative approach aims to identify stocks with superior growth potential, potentially leading to higher returns compared to market-cap weighted ETFs. However, FTC's small-cap focus and active management strategy expose it to higher volatility and expense ratios. It is suitable for investors with a long-term horizon and a higher risk tolerance looking for active management in the small-cap growth space. Investors should consider the fund's specific methodology and risk factors before investing.

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. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.