First Trust Emerging Markets Small Cap AlphaDEX® Fund (FEMS)

Overview

The First Trust Emerging Markets Small Cap AlphaDEXu00ae Fund (FEMS) seeks investment results that correspond to the AlphaDEXu00ae Emerging Markets Small Cap Index. It focuses on emerging market small-cap stocks, employing an enhanced indexing strategy.

Reputation and Reliability

First Trust is a well-established ETF provider with a strong track record of offering innovative investment solutions.

Management Expertise

First Trust has a dedicated team of portfolio managers and analysts with experience in managing ETFs and indexing strategies.

Goal

To provide investment results that correspond generally to the price and yield of the AlphaDEXu00ae Emerging Markets Small Cap Index.

Investment Approach and Strategy

Strategy: The fund uses an AlphaDEXu00ae methodology, which aims to select stocks based on growth factors including sales growth, price appreciation, and momentum, as well as value factors including book value to price, cash flow to price, and return on assets.

Composition The ETF primarily holds a diversified portfolio of small-cap stocks from emerging market countries.

Market Share: Information on specific market share is not readily available.

Total Net Assets (AUM): 100280000

Key Competitors

• DGS
• EEMS
• EWX
• SCZ

Competitive Landscape

The emerging markets small-cap ETF space includes several funds with varying indexing strategies and expense ratios. FEMS differentiates itself with its AlphaDEXu00ae methodology. This may lead to outperformance in certain market environments, but it can also result in higher volatility or underperformance in others compared to market-cap weighted funds. The competitive advantage of FEMS lies in its potential for alpha generation.

Historical Performance: Historical performance data would need to be obtained from financial data providers.

Benchmark Comparison: A benchmark comparison requires detailed performance data analysis against the AlphaDEXu00ae Emerging Markets Small Cap Index.

Expense Ratio: 0.8

Average Trading Volume

The average trading volume indicates moderate liquidity, ensuring relatively smooth trading for most investors.

Bid-Ask Spread

The bid-ask spread reflects the cost of trading and is typically reasonable, but varies based on market conditions.

Market Environment Factors

Economic growth in emerging markets, currency fluctuations, and geopolitical events significantly influence FEMS. Small-cap stocks in these markets are particularly sensitive to these factors.

Growth Trajectory

FEMS's growth is tied to the overall performance of emerging market small-cap stocks. Changes to strategy or holdings will occur periodically to maintain alignment with the AlphaDEXu00ae methodology.

Competitive Edge

FEMS's AlphaDEXu00ae methodology offers a distinct competitive advantage, aiming to select stocks based on both growth and value factors. This approach seeks to outperform traditional market-cap weighted indices. The fund's focus on small-cap stocks in emerging markets also provides diversification benefits. Additionally, First Trust's expertise in developing and managing factor-based ETFs contributes to the fund's attractiveness.

Volatility

Emerging market small-cap stocks are generally more volatile than large-cap stocks in developed markets. This makes FEMS a riskier investment compared to broader market ETFs.

Market Risk

Specific risks include currency risk, political instability, and regulatory changes in emerging market countries. These risks can significantly impact the value of the ETF's holdings.

Ideal Investor Profile

The ideal investor is one with a higher risk tolerance, seeking exposure to emerging markets and small-cap stocks for potential growth, and understands the associated volatility.

Market Risk

FEMS may be suitable for long-term investors seeking diversification and higher potential returns, but it's not ideal for risk-averse investors or those seeking passive index tracking.

FEMS offers targeted exposure to emerging market small-cap stocks through a unique AlphaDEXu00ae methodology. While providing potential for outperformance, it also entails higher volatility and risks associated with emerging markets. It is best suited for investors with a higher risk tolerance seeking diversification and potential long-term growth. Investors should carefully consider their investment objectives and risk appetite before investing in FEMS.

Data Sources:

• First Trust Website
• Financial data providers (e.g., Bloomberg, Reuters)

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Market share data may not be readily available or perfectly accurate. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.