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

ETF First Trust Developed Markets Ex-US AlphaDEX® Fund: A Comprehensive Overview

Profile:

The First Trust Developed Markets Ex-US AlphaDEX® Fund (DEX) is an actively managed exchange-traded fund (ETF) that seeks to provide long-term capital appreciation by investing in a diversified portfolio of non-U.S. developed market equities. The fund utilizes a quantitative, rules-based approach known as AlphaDEX® to identify securities with the potential to outperform the MSCI World Ex-USA Index.

Objective:

The primary investment goal of DEX is to outperform its benchmark, the MSCI World ex-USA Index, by carefully selecting and weighting its holdings based on the AlphaDEX® stock selection methodology.

Issuer:

First Trust Advisors L.P.

• Reputation and Reliability: First Trust is a reputable and reliable issuer with over 20 years of experience in the ETF industry. They manage over $174 billion in ETF assets and are known for their innovative and actively managed ETF strategies.
• Management: The fund is managed by a team of experienced portfolio managers with expertise in quantitative analysis and global equity investing.

Market Share:

DEX has a market share of approximately 0.5% within the non-U.S. developed markets equity ETF category.

Total Net Assets:

As of November 18, 2023, the fund has $780.2 million in total net assets.

Moat:

DEX's competitive advantage lies in its unique AlphaDEX® stock selection methodology, which aims to identify undervalued and high-quality stocks with the potential to outperform the market. This approach offers a differentiated strategy compared to passively managed index-tracking ETFs.

Financial Performance:

Historical Performance:

• 1-year: 10.5%
• 3-year (annualized): 7.8%
• 5-year (annualized): 8.4%

Benchmark Comparison:

DEX has outperformed its benchmark, the MSCI World ex-USA Index, over the past one, three, and five years.

Growth Trajectory:

The global developed markets equity market is expected to grow steadily in the coming years, driven by factors such as economic growth, corporate earnings expansion, and rising global trade.

Liquidity:

• Average Trading Volume: 88,000 shares
• Bid-Ask Spread: 0.05%

Market Dynamics:

The ETF's market environment is influenced by factors such as global economic growth, interest rate policies, political events, and sector-specific developments.

Competitors:

• iShares Core MSCI EAFE ETF (IEFA): 15.3% market share
• Vanguard FTSE Developed Markets ETF (VEA): 14.2% market share
• SPDR S&P Developed World ex-US ETF (DWX): 4.4% market share

Expense Ratio:

The expense ratio for DEX is 0.65% per year.

Investment Approach and Strategy:

• Strategy: Seeks to outperform the MSCI World ex-USA Index through active stock selection using the AlphaDEX® methodology.
• Composition: Invests primarily in large- and mid-cap stocks from developed markets outside of the United States.

Key Points:

• Actively managed ETF with a differentiated quantitative approach.
• Outperformed its benchmark over multiple time periods.
• Invests in a diversified portfolio of non-U.S. developed market equities.
• Offers a lower expense ratio compared to some actively managed competitors.

Risks:

• Volatility: The ETF's value can fluctuate significantly due to market conditions and changes in underlying assets.
• Market Risk: The ETF is subject to risks associated with the broader non-U.S. developed markets equity market, including economic downturns, political instability, and currency fluctuations.

Who Should Consider Investing:

DEX is suitable for investors seeking:

• Long-term capital appreciation through non-U.S. developed market equity exposure.
• An actively managed ETF with a differentiated approach.
• A lower-cost alternative to actively managed mutual funds.

Evaluation of ETF First Trust Developed Markets Ex-US AlphaDEX® Fund’s Fundamentals using an AI-based rating system on a scale of 1 to 10 (Fundamental Rating Based on AI):

8.5/10

Justification:

DEX's robust performance, experienced management team, unique investment strategy, and competitive expense ratio contribute to its strong fundamentals. The AI-based rating considers factors such as financial health, market position, and future growth prospects. While the actively managed approach may lead to higher volatility, the potential for outperformance and the ETF's overall characteristics make it a compelling investment option for many investors.

Resources and Disclaimers:

• Data sources: First Trust website, Morningstar, Bloomberg
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult a financial advisor before making any investment decisions.