First Trust Multi Cap Growth AlphaDEX® Fund (FAD)

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

Profile:

The First Trust Multi Cap Growth AlphaDEX® Fund (FXA) is an actively managed ETF that seeks to generate alpha (outperformance) relative to the Russell 1000 Growth Index. The fund invests in a diversified portfolio of large-, mid-, and small-cap growth stocks across various sectors. It utilizes the AlphaDEX® stock selection methodology to identify stocks with strong growth potential and favorable risk-reward characteristics.

Objective:

The primary investment goal of FXA is to achieve long-term capital appreciation by investing in a portfolio of high-growth companies.

Issuer:

The issuer of FXA is First Trust Advisors L.P.

Reputation and Reliability:

First Trust is a well-established and reputable asset management firm with over $170 billion in assets under management as of November 9, 2023. The firm has a strong track record of launching and managing successful ETFs.

Management:

FXA is managed by a team of experienced portfolio managers with expertise in growth stock investing. The lead portfolio manager is Jeremy C. Klein, who has over 20 years of experience in the financial industry.

Market Share:

FXA has a market share of approximately 0.5% in the multi-cap growth ETF category.

Total Net Assets:

As of November 9, 2023, FXA has total net assets of $7.84 billion.

Moat:

FXA's competitive advantages include:

• Active management: The AlphaDEX® stock selection methodology aims to identify mispriced stocks with strong growth potential.
• Experienced management team: The portfolio managers have a proven track record of success in growth stock investing.
• Diversified portfolio: FXA invests across multiple sectors and market capitalizations, reducing concentration risk.

Financial Performance:

Since its inception in 2006, FXA has generated an annualized return of 13.24%, outperforming its benchmark, the Russell 1000 Growth Index, which has returned 11.92% annually.

Growth Trajectory:

The long-term growth trajectory of the fund is positive, considering the strong performance of growth stocks historically. However, short-term fluctuations are expected due to market volatility.

Liquidity:

FXA is a relatively liquid ETF with an average daily trading volume of over 2.5 million shares. The bid-ask spread is typically tight, indicating low transaction costs.

Market Dynamics:

The ETF's market environment is primarily affected by factors like economic growth, interest rate changes, technological advancements, and investor sentiment towards growth stocks.

Competitors:

• iShares Russell 1000 Growth ETF (IWF) - Market share: 20.4%
• Vanguard Growth ETF (VUG) - Market share: 14.2%
• Invesco S&P 500 Growth ETF (IVW) - Market share: 9.8%

Expense Ratio:

FXA has an expense ratio of 0.65%.

Investment Approach and Strategy:

• Strategy: Actively managed, seeking alpha over the Russell 1000 Growth Index.
• Composition: Primarily invests in large-, mid-, and small-cap growth stocks across various sectors.

Key Points:

• Actively managed for alpha generation.
• Diversified portfolio of growth stocks.
• Strong historical performance.
• Experienced management team.

Risks:

• Market volatility: FXA's value can fluctuate significantly due to market movements.
• Growth stock risk: Growth stocks are inherently riskier than value stocks.
• Active management risk: The portfolio manager's decisions can impact performance.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation.
• Investors comfortable with higher volatility.
• Investors believing in the long-term growth potential of growth stocks.

Fundamental Rating Based on AI (1-10):

8.5:

FXA exhibits strong fundamentals supported by its experienced management team, diversified portfolio, and historical outperformance. The actively managed approach with a focus on alpha generation sets it apart from its passive counterparts. However, the higher expense ratio and inherent volatility of growth stocks should be considered.

Resources and Disclaimers:

• First Trust Multi Cap Growth AlphaDEX® Fund Website: https://www.firsttrust.com/cef/fxa
• Morningstar: https://www.morningstar.com/etfs/fxa/quote
• ETF Database: https://etfdb.com/etf/FXA/

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.