First Trust Developed Markets ex-US Small Cap AlphaDEX® Fund (FDTS)

ETF First Trust Developed Markets ex-US Small Cap AlphaDEX® Fund (FEXS) Overview

Profile:

FEXS is an actively managed ETF that invests in small-cap stocks of developed markets outside the United States. It utilizes the AlphaDEX® stock selection methodology, prioritizing stocks with strong potential for outperformance based on factors like relative strength, value, earnings momentum, and quality. The ETF focuses on developed markets excluding the US, providing exposure to diverse economies and industries.

Objective:

FEXS aims to achieve long-term capital appreciation by investing in a diversified portfolio of small-cap stocks from developed markets outside the US.

Issuer:

First Trust is the issuer of FEXS. They are a leading provider of exchange-traded funds (ETFs) with a strong reputation and long track record in the market. Founded in 1991, they manage over $174 billion in assets across various sectors and asset classes.

Market Share:

FEXS holds a market share of approximately 0.74% within the developed international small-cap equity ETF category.

Total Net Assets:

As of November 2023, FEXS has around $530 million in total net assets.

Moat:

FEXS's moat lies in its unique investment strategy and experienced management team. The AlphaDEX® methodology, coupled with First Trust's expertise in active management, helps the ETF identify and invest in small-cap stocks with high growth potential. This approach differentiates FEXS from other passive ETFs in the same category.

Financial Performance:

FEXS has generally outperformed its benchmark index, the MSCI EAFE Small Cap Index, over the past three and five years. However, it's important to note that past performance does not guarantee future results.

Growth Trajectory:

The growth trajectory for small-cap stocks in developed markets appears promising, driven by increasing global economic activity and potential for innovation. However, market conditions and sector-specific risks can influence the ETF's performance.

Liquidity:

FEXS has an average trading volume of approximately 50,000 shares per day, indicating good liquidity. Additionally, the bid-ask spread is relatively low, making it cost-effective to trade the ETF.

Market Dynamics:

Economic indicators like GDP growth, interest rates, and inflation play a significant role in influencing the performance of small-cap stocks. Additionally, sector-specific factors like technological advancements and regulatory changes can impact FEXS's performance.

Competitors:

Key competitors include iShares MSCI EAFE Small-Cap ETF (SCZ), VanEck Vectors International Small-Cap ETF (SCIZ), and SPDR S&P International SmallCap ETF (GWX).

Expense Ratio:

FEXS has an expense ratio of 0.65%, which is slightly higher than some competitor ETFs.

Investment Approach and Strategy:

FEXS employs an active management strategy utilizing the AlphaDEX® methodology to select stocks with high growth potential. The ETF invests primarily in small-cap companies from developed markets outside the US, focusing on various sectors and industries.

Key Points:

• Actively managed ETF focusing on developed markets ex-US small-cap stocks.
• Aims for long-term capital appreciation through the AlphaDEX® stock selection methodology.
• Outperformed benchmark index in recent years.
• Good liquidity and reasonable expense ratio.
• Exposed to market risks and small-cap volatility.

Risks:

• Market risk: The ETF's performance is directly linked to the performance of small-cap stocks in developed markets, which can be more volatile than large-cap stocks.
• Volatility: Small-cap stocks are inherently more volatile than large-cap stocks, leading to potential fluctuations in the ETF's price.
• Currency risk: FEXS invests in foreign markets, exposing it to currency fluctuations that can impact its returns.

Who Should Consider Investing:

FEXS is suitable for investors seeking:

• Long-term capital appreciation from developed markets ex-US small-cap stocks.
• Exposure to diverse industries and economies outside the US.
• Active management approach with the potential to outperform the benchmark.

Investors should consider their risk tolerance and investment goals before investing in FEXS.

Fundamental Rating Based on AI:

Based on an AI-based analysis considering financial health, market position, and future prospects, FEXS receives a 7.5/10 rating. The ETF demonstrates strong financial performance, a unique investment approach, and a reputable issuer. However, it's important to remember that market conditions and risks can influence the ETF's future performance.

Resources and Disclaimers:

This analysis utilizes data from the following sources:

• First Trust website: https://www.ftportfolios.com/ftportfolios/ETF/FEXS
• Morningstar: https://www.morningstar.com/etfs/arcx/fexs/quote
• Yahoo Finance: https://finance.yahoo.com/quote/FEXS/

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