First Trust Multi Cap Value AlphaDEX® Fund (FAB)FAB

ETF First Trust Multi Cap Value AlphaDEX® Fund (FNK):

Profile: The First Trust Multi Cap Value AlphaDEX® Fund (FNK) is an actively managed exchange-traded fund seeking capital appreciation by investing in large-, mid-, and small-cap US stocks exhibiting value characteristics. The fund employs a proprietary quantitative model, the AlphaDEX® Index, to select and weight stocks with favorable value, growth, and quality factors.

Objective: The fund's primary objective is to generate long-term capital appreciation by investing in a portfolio of U.S. equities exhibiting value characteristics and employing a multi-cap approach.

Issuer:

• Name: First Trust Advisors L.P.
• Reputation and Reliability: First Trust is a reputable and reliable asset management company with over $211.3 billion in assets under management. They are known for their expertise in managing index and actively managed ETFs.
• Management: The portfolio management team has extensive experience in quantitative analysis and portfolio construction.

Market Share: FNK holds a small market share in the large multi-cap value ETF category.

Total Net Assets: $2.21 billion as of November 1, 2023.

Moat: FNK's AlphaDEX® Index distinguishes it from competitors by focusing on a quantitative approach to identify value stocks. This may provide a competitive advantage in terms of stock selection.

Financial Performance:

• Historical Performance: The fund has delivered mixed historical returns:
  • 1-Year: -11.94%
  • 3-Year: 12.07% (annualized)
  • 5-Year: 11.81% (annualized)
  • 10-Year: 11.69% (annualized)
• Benchmark Comparison: FNK has outperformed the Russell 1000 Value Index in 3 out of the past 5 years. However, it underperformed in the past year.

Growth Trajectory: FNK's AUM and net flows have been relatively stable over the past year, suggesting a moderate growth trajectory.

Liquidity:

• Average Trading Volume: 240,000 shares
• Bid-Ask Spread: 0.02%

Market Dynamics: Factors such as economic growth, inflation, and interest rate changes can impact the fund's performance. The value investing style can outperform in specific market environments.

Competitors:

• iShares S&P 500 Value ETF (IVE): 7.21% market share
• Vanguard Value ETF (VTV): 6.89% market share
• Schwab U.S. Large-Cap Value ETF (SCHV): 5.84% market share

Expense Ratio: 0.60%

Investment Approach:

• Strategy: Actively managed, utilizing the AlphaDEX® Index to select stocks based on value, growth, and quality factors.
• Composition: Primarily invests in large-, mid-, and small-cap U.S. stocks with a value tilt.

Key Points:

• Actively managed with a quantitative approach to stock selection.
• Focuses on large-, mid-, and small-cap value stocks.
• History of outperforming its benchmark over the long term.
• Relatively low expense ratio.

Risks:

• Volatility: FNK has experienced higher volatility compared to the overall market.
• Market Risk: The fund is exposed to market risks associated with U.S. equities, particularly value stocks, which may be more susceptible to market downturns.
• AlphaDEX® Index Risk: The performance of the fund is highly dependent on the accuracy and effectiveness of the AlphaDEX® Index.

Who Should Consider Investing: Investors with a long-term perspective and a tolerance for higher volatility who believe in the value investing approach may consider FNK.

Evaluation of ETF First Trust Multi Cap Value AlphaDEX® Fund’s Fundamentals using an AI-based rating system on a scale of 1 to 10, titled 'Fundamental Rating Based on AI':

Fundamental Rating Based on AI: 7.5

Analysis: FNK scores well on several key factors:

• Experienced Management Team: First Trust has a strong reputation and a proven track record of managing ETFs.
• Quantitative Approach: The AlphaDEX® Index provides a systematic and data-driven approach to stock selection.
• Competitive Fees: FNK's expense ratio is relatively low compared to its peers.
• Outperformance Potential: The fund has a history of exceeding its benchmark over time.

However, some considerations may affect its overall score:

• Volatility: FNK's higher volatility may not be suitable for all investors.
• Market Risk: The current market environment may pose challenges for value investing strategies.
• Limited Market Share: FNK has a smaller market share compared to some of its larger competitors, which could affect liquidity.

Overall, FNK is a well-managed fund with a solid investment strategy and a competitive cost structure. However, investors should carefully consider its risks before investing.

Resources and Disclaimers:

• First Trust Website: https://www.ftportfolios.com/
• FNK ETF Page: https://www.ftportfolios.com/ft-funds/fnk
• Morningstar Fund Report: https://www.morningstar.com/etfs/xfact/fnk

Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. Please consult with a qualified financial professional before making any investment decisions.