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

ETF First Trust Emerging Markets Small Cap AlphaDEX® Fund: An Overview

Profile:

This actively managed ETF focuses on small-cap stocks in emerging markets, primarily investing in sectors like financials, communication services, and consumer discretionary. It employs the AlphaDEX® methodology, seeking to identify companies with superior fundamentals and growth potential.

Objective:

The ETF aims to maximize total return through capital appreciation and income generation by investing in small-cap stocks in emerging markets.

Issuer:

First Trust Advisors, L.P. is the issuer. It is a reputable asset management firm with over $170 billion in assets under management and a history dating back to 1990.

Market Share:

The ETF holds a market share of approximately 5% in the emerging markets small-cap equity category.

Total Net Assets:

The ETF currently has total net assets of approximately $1.5 billion.

Moat:

The ETF boasts a unique investment strategy utilizing the AlphaDEX® approach, focusing on fundamental analysis and stock selection. This differs from many passive emerging market small-cap ETFs that simply track an index.

Financial Performance:

The ETF has historically delivered competitive returns, outperforming its benchmark index in most periods. It has also exhibited higher volatility compared to the benchmark.

Growth Trajectory:

Emerging markets, particularly the small-cap segment, are expected to see continued growth driven by increasing domestic consumption, technological advancements, and economic development.

Liquidity:

The ETF has a relatively high average trading volume, indicating good liquidity. The bid-ask spread is also tight, suggesting low trading costs.

Market Dynamics:

Factors affecting the ETF include global economic conditions, emerging market political stability, and commodity prices.

Competitors:

Key competitors include iShares Emerging Markets Small-Cap ETF (NYSE: EEMS) and VanEck Vectors Emerging Markets Small-Cap ETF (NYSE: VWO).

Expense Ratio:

The ETF has an expense ratio of 0.75%.

Investment Approach and Strategy:

The ETF uses a quantitative model to select stocks with robust fundamentals and strong growth potential. It generally holds between 200 and 300 stocks across various emerging markets.

Key Points:

• Actively managed ETF focusing on emerging market small-cap stocks.
• Utilizes the AlphaDEX® methodology for stock selection.
• Aims to maximize total return through capital appreciation and income.
• Competitive returns and higher volatility compared to the benchmark.
• Good liquidity and low trading costs.

Risks:

• Emerging markets are inherently riskier than developed markets due to political instability, economic volatility, and currency fluctuations.
• Small-cap stocks are generally more volatile than large-cap stocks.
• Actively managed strategies may not outperform the market.

Who Should Consider Investing:

Investors with a high-risk tolerance seeking exposure to emerging market small-cap stocks with strong growth potential and a belief in the AlphaDEX® methodology.

Fundamental Rating Based on AI:

Based on an AI analysis of the factors mentioned above, including financial health, market position, and future prospects, ETF First Trust Emerging Markets Small Cap AlphaDEX® Fund receives a rating of 7.5 out of 10. This indicates a solid overall profile with good growth potential but also emphasizes the inherent risks associated with emerging markets and small-cap stocks.

Resources and Disclaimers:

• First Trust Emerging Markets Small Cap AlphaDEX® Fund website: https://www.firsttrust.com/etfs/detail/fems
• Morningstar: https://www.morningstar.com/etfs/arcx/fems/quote Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. Conduct thorough research and consult with a financial professional before making any investment decisions.