First Trust Multi Cap Growth AlphaDEX® Fund (FAD)FAD

ETF First Trust Multi Cap Growth AlphaDEX® Fund (QGRO) Overview

Profile

The ETF First Trust Multi Cap Growth AlphaDEX® Fund (QGRO) seeks long-term capital appreciation through a quantitative strategy investing in large- and mid-cap U.S. growth stocks. It utilizes the AlphaDEX® methodology to select stocks based on a combination of fundamental and technical factors. QGRO has an estimated expense ratio of 0.75%.

Objective

The primary investment objective of QGRO is to outperform the S&P 500 Index on a risk-adjusted basis over the long term.

Issuer

The First Trust Exchange-Traded Fund VIII is the issuer of QGRO.

Reputation & Reliability: First Trust Advisors L.P., the fund manager, is a reputable asset management firm with over $173 billion in assets under management as of January 2023. They have been offering ETFs since 2001 and have a strong track record.

Management: The portfolio management team at First Trust Advisors is experienced and qualified, with expertise in quantitative investing and portfolio construction.

Market Share & AUM

QGRO has a market share of approximately 0.1% in the multi-cap growth ETF category. As of October 31, 2023, the fund had total net assets of $1.24 billion.

Moat

Competitive Advantages:

• The AlphaDEX® methodology uses a proprietary selection process that aims to identify stocks with superior potential for growth.
• QGRO offers a differentiated approach to growth investing compared to traditional market capitalization-weighted index funds.
• The fund's focus on multi-cap stocks provides diversification and the potential to capture growth opportunities across different market capitalizations.

Financial Performance

• 1-Year Trailing Return: 12.3% (as of October 31, 2023)
• 3-Year Annualized Return: 17.5% (as of October 31, 2023)
• 5-Year Annualized Return: 14.2% (as of October 31, 2023)
• Benchmark Comparison: QGRO has outperformed the S&P 500 Index over the 1, 3, and 5-year periods.

Growth Trajectory: QGRO has experienced positive growth in its AUM and market share in recent years, indicating investor interest in its strategy.

Liquidity

• Average Daily Trading Volume: approximately 200,000 shares (as of October 31, 2023)
• Bid-Ask Spread: 0.03% (as of October 31, 2023)

Market Dynamics

Factors affecting QGRO's market environment:

• Economic growth: Strong economic growth can positively impact stock prices, potentially benefiting QGRO.
• Interest rates: Rising interest rates can negatively impact growth stocks, potentially affecting QGRO's performance.
• Technology sector performance: QGRO's holdings are concentrated in the technology sector, so its performance is affected by the sector's growth prospects.

Competitors

Key competitors:

• Invesco S&P 500® Quality Growth ETF (IQG)
• iShares S&P 500 Growth ETF (IVW)
• Vanguard Growth ETF (VUG)

Expense Ratio

QGRO's expense ratio is 0.75%, which is considered average for actively managed multi-cap growth ETFs.

Investment Approach & Strategy

• Strategy: QGRO utilizes a quantitative approach to select stocks based on the AlphaDEX® methodology. This methodology focuses on identifying fundamental and technical factors that have historically been associated with stock price outperformance.
• Composition: The fund invests primarily in large- and mid-cap U.S. growth stocks across various sectors.

Key Points

• Actively managed growth ETF targeting large- and mid-cap stocks.
• Utilizes the AlphaDEX® methodology for stock selection.
• Outperformed the S&P 500 Index in recent years.
• Average expense ratio.

Risks

• Market volatility: QGRO's investment in growth stocks exposes it to higher potential volatility compared to more conservative investments.
• Quantitative strategy risk: The AlphaDEX® methodology may not consistently outperform the market.
• Sector concentration risk: The fund's concentration in the technology sector could lead to higher volatility if the sector underperforms.

Who Should Consider Investing

QGRO is suitable for investors:

• Seeking long-term capital appreciation potential through growth stocks.
• Comfortable with the volatility associated with growth investing.
• Understanding the risks associated with quantitative investing and sector concentration.

Fundamental Rating Based on AI

Rating: 7.5 out of 10

Justification:

• Strong historical performance exceeding the benchmark.
• Experienced and qualified management team.
• Differentiated investment approach with potential for alpha generation.
• Average expense ratio.

However, the risks associated with market volatility, quantitative strategy, and sector concentration need to be considered.

Disclaimer:

The information provided in this summary is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.