First Trust Small Cap Value AlphaDEX® Fund (FYT)

Overview

The First Trust Small Cap Value AlphaDEXu00ae Fund (FYX) is an exchange-traded fund that seeks investment results that correspond to the AlphaDEXu00ae Small Cap Value Index. It invests in small-cap U.S. companies with value characteristics, selected and weighted using the AlphaDEXu00ae methodology, which aims to outperform traditional market-cap weighted indexes.

Reputation and Reliability

First Trust is a well-established ETF provider with a solid reputation for offering innovative and actively managed ETFs.

Management Expertise

First Trust Advisors L.P. has a team of experienced portfolio managers and analysts dedicated to implementing the AlphaDEXu00ae methodology.

Goal

To seek investment results that correspond to the AlphaDEXu00ae Small Cap Value Index.

Investment Approach and Strategy

Strategy: The fund uses the AlphaDEXu00ae stock selection methodology, which scores and ranks stocks based on growth and value factors, then selects the highest-ranking stocks for inclusion in the index.

Composition The fund holds a diversified portfolio of small-cap U.S. stocks identified as having value characteristics.

Market Share: FYX holds a small portion of the small-cap value ETF market.

Total Net Assets (AUM): 169400000

Key Competitors

• IJS
• VBR
• AVUV
• DFSV

Competitive Landscape

The small-cap value ETF market is highly competitive, with several established players offering similar strategies. FYX distinguishes itself through its AlphaDEXu00ae methodology. While its AUM is smaller compared to larger competitors like IJS and VBR, its active approach may appeal to investors seeking higher potential returns, but this comes with potentially higher risks and costs.

Historical Performance: Historical performance data should be gathered from financial data providers.

Benchmark Comparison: Performance should be compared to the Russell 2000 Value Index or similar benchmarks.

Expense Ratio: 0.69

Average Trading Volume

The fund's average trading volume is moderate, and this could impact execution costs.

Bid-Ask Spread

The bid-ask spread can vary but can impact short-term trading profitability.

Market Environment Factors

Small-cap value stocks are sensitive to economic growth, interest rates, and investor sentiment towards smaller companies. Value investing can underperform growth during specific market cycles.

Growth Trajectory

The fund's growth trajectory depends on the performance of its AlphaDEXu00ae methodology and its ability to attract assets from investors seeking value strategies.

Competitive Edge

FYX's competitive advantage lies in its proprietary AlphaDEXu00ae methodology, which aims to identify and overweight stocks with strong value and growth characteristics. This quantitative approach seeks to outperform traditional market-cap weighted indexes. The fund's focus on small-cap value stocks provides exposure to a segment of the market that may be underrepresented in broader market indexes. However, the success of the strategy depends on the continued effectiveness of the AlphaDEXu00ae methodology in selecting and weighting stocks.

Volatility

Small-cap stocks are generally more volatile than large-cap stocks, contributing to higher overall volatility for the fund.

Market Risk

The fund is susceptible to market risk, especially related to the performance of small-cap and value stocks. Additionally, the fund's AlphaDEXu00ae methodology may lead to higher turnover and potential tax implications.

Ideal Investor Profile

FYX is suitable for investors seeking exposure to the small-cap value segment of the U.S. equity market and who believe in the AlphaDEXu00ae methodology. Investors should have a moderate to high risk tolerance.

Market Risk

This ETF may be suitable for investors with a long-term investment horizon seeking to diversify their portfolio with small-cap value stocks and who are willing to accept higher volatility.

The First Trust Small Cap Value AlphaDEXu00ae Fund (FYX) offers exposure to small-cap value stocks using a quantitative stock selection methodology. Its AlphaDEXu00ae approach aims to outperform traditional market-cap weighted indexes. However, its higher expense ratio and focus on a specific investment style may not be suitable for all investors. It is best suited for investors with a moderate to high risk tolerance and a long-term investment horizon, who believe in the potential of the AlphaDEXu00ae methodology to generate superior returns within the small-cap value universe.

Data Sources:

• First Trust Advisors L.P.
• 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. Market share is based on available AUM information and is subject to change.