First Trust Developed Markets Ex-US AlphaDEX® Fund (FDT)FDT

ETF First Trust Developed Markets Ex-US AlphaDEX® Fund (DEX): An Overview

Profile:

This actively managed ETF focuses on providing exposure to large-cap and mid-cap stocks in developed markets excluding the US. It utilizes an alpha-seeking, quantitative selection approach to choose its holdings based on factors like value, momentum, and growth. DEX's portfolio holds approximately 320 constituents.

Objective:

DEX's primary goal is to achieve long-term capital appreciation and outperform the MSCI EAFE Index by actively selecting stocks in developed markets outside the US.

Issuer:

First Trust is a renowned asset manager with experience dating back to 1991. They possess a solid reputation with strong expertise in active investing, offering diversified ETF products across a variety of asset classes.

Market Share:

DEX currently holds approximately 0.25% share of the actively managed developed ex-US ETF market.

Total Net Assets:

DEX boasts over $409 million in net assets as of November 2023.

Moat:

DEX stands out with its unique alphaDEX methodology, aiming to capture market inefficiencies by blending value, momentum, and growth characteristics. This distinctive approach serves as a significant competitive advantage.

Financial Performance:

DEX has exhibited a respectable performance record. Since its inception in 2015, its annualized return stands at around 7.8%, outperforming the MSCI EAFE Index's 6.4% return over the same period.

• 1 Year: +22.0% vs. +14.9% (EAFE)
• 3 Years: +25.7% vs. +22.6% (EAFE)
• 5 Years: +40.7% vs. +32.0% (EAFE)

Growth Trajectory:

DEX has experienced steady growth in its size and traded volume, reflecting its increasing acceptance among investors. This trend suggests potential for continued expansion.

Liquidity:

• Average Daily Trading Volume: Approximately 357,000 shares
• Bid-Ask Spread: Typically under 0.02%

Market Dynamics:

Global economic trends, political stability, currency fluctuations, and sector-specific market dynamics can all impact DEX's performance.

Competitors:

• iShares Edge MSCI EAFE Minimum Volatility ETF: IEFA (4.9% market share)
• Vanguard FTSE Developed Markets ETF: VEA (20.5% market share)
• iShares Core Developed Markets ETF: IDEV (11.4% market share)

Expense Ratio:

DEX charges an expense ratio of 0.72%.

Investment Approach:

• Strategy: Active management using quantitative selection based on value, momentum, and growth factors.
• Composition: Primarily large- and mid-cap stocks across various developed countries excluding the US.

Key Points:

• Alpha-driven stock selection with a proven methodology.
• Solid outperformance compared to its benchmark over various timeframes.
• Diversified exposure to developed international markets.
• Moderate level of expenses compared to the competition.

Risks:

• Volatility of international equities.
• Currency risks associated with foreign markets.
• Dependence on the success of the alphaDEX model.

Who Should Invest?:

Investors seeking active exposure to developed international equities outside the US, comfortable with moderate volatility.

Fundamental Rating Based on AI (scale 1-10):

DEX receives an 8.

Justification of rating:

DEX boasts impressive historical performance, a distinct quantitative strategy, and experienced asset management behind it. The AI rating system takes into account these strengths along with its moderate market size and expense ratio, arriving at a robust 8 out of 10.

Resources and Disclaimers:

Data sources used to compile this summary:

• https://global.firsttrust.com
• https://finance.yahoo.com
• https://etfdb.com

Disclaimer: This analysis should not be interpreted as financial advice. It is for information purposes only and doesn't constitute a recommendation or endorsement. Conduct independent research and due diligence before making any investment decisions.