First Trust Small Cap Value AlphaDEX® Fund (FYT)

Overview

The First Trust Small Cap Value AlphaDEXu00ae Fund (FYCN) seeks to track the performance of the Nasdaq US Small Cap Value Leaders Index. It employs an AlphaDEXu00ae methodology that ranks stocks based on growth and value factors, aiming to identify outperforming small-cap value equities. The fund focuses on U.S. publicly traded common stocks.

Reputation and Reliability

First Trust is a well-established and reputable provider of exchange-traded funds (ETFs) known for its diverse range of actively managed and index-based ETFs. They have a strong track record in the ETF industry.

Management Expertise

The fund is managed by First Trust Advisors L.P., which has a team of experienced investment professionals with expertise in quantitative strategies and U.S. equity markets. Their AlphaDEXu00ae methodology is a proprietary approach to stock selection.

Goal

The primary investment goal of the First Trust Small Cap Value AlphaDEXu00ae Fund is to provide capital appreciation by investing in a portfolio of U.S. small-capitalization common stocks that exhibit characteristics of value.

Investment Approach and Strategy

Strategy: The ETF aims to track the Nasdaq US Small Cap Value Leaders Index, which is designed to identify U.S. small-capitalization stocks with strong growth and value characteristics. It is not a passive index tracker but uses a proprietary quantitative methodology (AlphaDEXu00ae) to select stocks.

Composition The ETF holds a diversified portfolio of U.S. small-capitalization common stocks. The specific composition changes based on the index's methodology and the AlphaDEXu00ae selection criteria.

Market Share: Market share data for specific ETFs can fluctuate and is proprietary. However, as of recent data, the First Trust Small Cap Value AlphaDEXu00ae Fund is a notable player within the U.S. small-cap value ETF space.

Total Net Assets (AUM): 430000000

Key Competitors

• iShares Russell 2000 Value ETF (IWV)
• Vanguard Small-Cap Value ETF (VBR)
• Schwab U.S. Small-Cap Value ETF (SCHV)

Competitive Landscape

The U.S. small-cap value ETF market is competitive, with several large players offering broad market exposure. FYCN's AlphaDEXu00ae methodology offers a quantitative, factor-based approach, which can be an advantage for investors seeking a more sophisticated stock selection process beyond simple market-cap weighting. However, its relatively smaller AUM compared to giants like iShares and Vanguard might mean slightly less liquidity in certain market conditions.

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Benchmark Comparison: The First Trust Small Cap Value AlphaDEXu00ae Fund generally aims to outperform its benchmark, the Nasdaq US Small Cap Value Leaders Index, due to its proprietary stock selection methodology. Performance relative to the benchmark can vary over time based on market conditions and the effectiveness of the AlphaDEXu00ae factors.

Expense Ratio: 0.7

Average Trading Volume

The ETF typically exhibits moderate average daily trading volume, indicating reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread for this ETF is generally competitive, reflecting its inclusion in a popular and actively traded asset class.

Market Environment Factors

Factors such as interest rate movements, inflation expectations, economic growth outlook, and investor sentiment towards small-cap and value stocks significantly influence the performance of the First Trust Small Cap Value AlphaDEXu00ae Fund. A robust economic environment typically benefits small-cap value stocks.

Growth Trajectory

The fund's growth trajectory is tied to the overall performance of the U.S. small-cap value segment and the efficacy of its AlphaDEXu00ae selection methodology. Changes in sector allocations or underlying holdings are driven by the Nasdaq US Small Cap Value Leaders Index rebalancing and the AlphaDEXu00ae ranking updates.

Competitive Edge

The primary competitive edge of FYCN lies in its proprietary AlphaDEXu00ae selection methodology. This quantitative approach goes beyond simple index replication by ranking stocks based on multiple growth and value metrics. This allows for a potentially more concentrated and selectively chosen portfolio of small-cap value companies, aiming for superior risk-adjusted returns compared to traditional market-cap weighted indices. The focus on identifying leaders within the small-cap value segment can provide a unique exposure.

Volatility

As a small-cap value ETF, FYCN is subject to higher volatility than large-cap or growth-oriented funds. Its historical volatility tends to be above that of broader market indices.

Market Risk

The underlying assets of FYCN are small-cap U.S. stocks. These companies are generally more susceptible to economic downturns, higher interest rates, and company-specific risks compared to larger, more established companies. Value stocks can also underperform growth stocks during certain market cycles.

Ideal Investor Profile

The ideal investor for FYCN is one with a moderate to high risk tolerance, seeking exposure to the U.S. small-cap value segment, and who believes in the efficacy of quantitative, factor-based stock selection. Investors should have a long-term investment horizon.

Market Risk

This ETF is best suited for long-term investors who are looking for capital appreciation and are comfortable with the inherent volatility of small-cap stocks. It is also suitable for those who wish to diversify their portfolios with a specific focus on value characteristics within the small-cap universe.

The First Trust Small Cap Value AlphaDEXu00ae Fund (FYCN) offers a quantitative approach to investing in U.S. small-cap value stocks, aiming to outperform its benchmark through its AlphaDEXu00ae methodology. While it faces competition from larger ETFs, its unique selection process provides a potential advantage. The fund is suitable for long-term investors with a higher risk tolerance seeking growth and value exposure within the small-cap segment.

Data Sources:

• First Trust website
• Financial data providers (e.g., Morningstar, ETF.com)

Disclaimers:

This information is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Investors should conduct their own due diligence and consult with a qualified financial advisor before making investment decisions.