First Trust Small Cap Growth AlphaDEX® Fund (FYC)

Overview

The First Trust Small Cap Growth AlphaDEXu00ae Fund (FKRC) is an exchange-traded fund that seeks to track the performance of the Nasdaq AlphaDEXu00ae Small Cap Growth Index. It focuses on identifying and investing in small-capitalization U.S. equities exhibiting strong growth characteristics, utilizing a proprietary quantitative methodology to select and weight constituents.

Reputation and Reliability

First Trust Portfolios L.P. is a well-established and reputable issuer of ETFs, known for its diverse range of actively managed and index-based strategies. The firm has a long history of providing innovative investment products to investors.

Management Expertise

The ETF is managed by First Trust Advisors L.P., which employs a team of experienced investment professionals with expertise in quantitative research, portfolio management, and risk management. The AlphaDEXu00ae methodology itself is a proprietary system developed to identify outperforming stocks.

Goal

The primary investment goal of the First Trust Small Cap Growth AlphaDEXu00ae Fund is to provide capital appreciation by investing in a portfolio of U.S. small-capitalization companies that exhibit characteristics associated with growth.

Investment Approach and Strategy

Strategy: This ETF aims to track the Nasdaq AlphaDEXu00ae Small Cap Growth Index. It is not a passively managed index fund in the traditional sense, as the AlphaDEXu00ae methodology involves a quantitative selection and weighting process, which is more active than a pure market-cap weighted index.

Composition The ETF primarily holds U.S. common stocks of small-capitalization companies. The selection and weighting are based on specific quantitative factors such as growth, value, momentum, quality, and volatility.

Market Share: Precise market share data for individual ETFs within specific sub-sectors is dynamic and proprietary. However, the small-cap growth ETF space is competitive.

Total Net Assets (AUM): 1467000000

Key Competitors

• iShares Russell 2000 Growth ETF (IWO)
• Vanguard Small-Cap Growth ETF (VBK)
• Schwab U.S. Small-Cap Growth ETF (SCHG)

Competitive Landscape

The small-cap growth ETF market is highly competitive, with several large players offering broad exposure. First Trust Small Cap Growth AlphaDEXu00ae Fund differentiates itself through its proprietary AlphaDEXu00ae methodology, which aims to identify stocks with superior growth and value characteristics beyond simple market-cap weighting. Potential disadvantages could include higher expense ratios compared to some passive peers and the inherent risks of quantitative strategies.

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Benchmark Comparison: The ETF's performance is benchmarked against the Nasdaq AlphaDEXu00ae Small Cap Growth Index. Historical data often shows the ETF performing in line with, or slightly deviating from, its benchmark due to the active selection and weighting process.

Expense Ratio: 0.69

Average Trading Volume

The average daily trading volume for the First Trust Small Cap Growth AlphaDEXu00ae Fund is typically sufficient for most retail and institutional investors to enter and exit positions without significant price impact.

Bid-Ask Spread

The bid-ask spread for the First Trust Small Cap Growth AlphaDEXu00ae Fund generally remains relatively tight, reflecting good liquidity and minimal transaction costs for investors.

Market Environment Factors

The ETF is sensitive to economic indicators such as interest rate changes, inflation, and overall economic growth, which significantly influence the performance of small-cap companies. Sector-specific trends, particularly in technology and healthcare, which often have a strong presence in growth-oriented portfolios, also play a crucial role. Current market conditions favoring growth stocks or volatility in the small-cap segment will directly impact FKRC.

Growth Trajectory

The growth trajectory of the First Trust Small Cap Growth AlphaDEXu00ae Fund is tied to the performance of its underlying holdings and the effectiveness of the AlphaDEXu00ae methodology in identifying high-growth potential small-cap companies. Changes in strategy would typically involve adjustments to the quantitative factors used in stock selection or changes in the weighting methodology.

Competitive Edge

The First Trust Small Cap Growth AlphaDEXu00ae Fund's primary competitive advantage lies in its proprietary AlphaDEXu00ae selection methodology. This quantitative approach aims to systematically identify small-cap growth stocks with superior performance characteristics based on multiple factors. This systematic, data-driven approach seeks to offer a distinct alternative to traditional market-cap-weighted small-cap growth indexes, potentially leading to more targeted exposure to growth opportunities.

Volatility

The ETF exhibits higher historical volatility compared to large-cap equity ETFs due to its focus on small-cap growth stocks, which are generally more sensitive to market fluctuations and company-specific news.

Market Risk

The primary market risks associated with the First Trust Small Cap Growth AlphaDEXu00ae Fund include equity risk (potential for stock prices to decline), small-cap risk (small companies are more susceptible to economic downturns and business failures), and growth stock risk (growth stocks can be highly sensitive to interest rate changes and may underperform during periods of economic contraction).

Ideal Investor Profile

The ideal investor for the First Trust Small Cap Growth AlphaDEXu00ae Fund is an individual or institution seeking exposure to the potential high growth of U.S. small-capitalization companies, with a tolerance for higher volatility and a belief in a quantitative, factor-based investment approach.

Market Risk

This ETF is best suited for long-term investors who are willing to accept the inherent risks of small-cap investing and are looking for a growth-oriented component in their portfolio. It is less suitable for very conservative investors or those seeking immediate income generation.

The First Trust Small Cap Growth AlphaDEXu00ae Fund (FKRC) offers investors exposure to U.S. small-cap growth stocks through a proprietary quantitative selection process based on the AlphaDEXu00ae methodology. While it operates in a competitive market, its unique approach aims to identify outperforming companies. Investors should be aware of the higher volatility and specific risks associated with small-cap growth equities, making it more suitable for long-term, risk-tolerant portfolios.

Data Sources:

• First Trust Portfolios L.P. official website
• Financial data aggregators (e.g., Morningstar, Yahoo Finance)

Disclaimers:

This JSON output is for informational purposes only and does not constitute investment advice. ETF performance data can fluctuate, and past performance is not indicative of future results. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions. Market share data is an estimation and can change rapidly.