First Trust Europe AlphaDEX® Fund (FEP)FEP

US ETF First Trust Europe AlphaDEX® Fund Summary

Profile: The First Trust Europe AlphaDEX® Fund (Ticker: FEUR) is an actively-managed exchange-traded fund focusing on large- and mid-cap European equities. It employs a proprietary quantitative model known as the AlphaDEX® methodology to select stocks expected to outperform the broader European market. FEUR primarily invests in developed European markets, excluding the UK.

Objective: The fund aims to achieve long-term capital appreciation by investing in a diversified portfolio of European stocks with the potential to outperform the market.

Issuer: First Trust Advisors L.P. is the issuer of FEUR.

• Reputation and Reliability: First Trust is a well-established asset management firm with a strong track record, managing over $215 billion in assets across various investment products.
• Management: The fund is managed by experienced portfolio managers with expertise in quantitative investment strategies and European equities.

Market Share and Total Net Assets: FEUR holds a market share of approximately 0.3% within the European equity ETF category. As of November 2023, the fund has total net assets of approximately $350 million.

Moat:

• Unique Strategy: The AlphaDEX® methodology provides a differentiated approach to stock selection, potentially leading to superior returns.
• Active Management: The active management style allows for greater flexibility and potential outperformance compared to passively managed index-tracking ETFs.

Financial Performance: FEUR has historically outperformed its benchmark index, the MSCI Europe Index, over various timeframes. However, past performance is not indicative of future results.

Benchmark Comparison: FEUR has consistently outperformed the MSCI Europe Index since its inception, demonstrating the effectiveness of its active management strategy.

Growth Trajectory: The European equity market is expected to see moderate growth in the coming years, driven by economic recovery and corporate earnings growth. FEUR's focus on high-quality, growth-oriented companies could potentially benefit from this trend.

Liquidity:

• Average Trading Volume: FEUR has a relatively low average daily trading volume, indicating lower liquidity compared to larger ETFs.
• Bid-Ask Spread: The bid-ask spread is typically narrow, suggesting minimal transaction costs associated with buying or selling the ETF.

Market Dynamics: Factors affecting FEUR's market environment include European economic growth, interest rate policies, and global market volatility.

Competitors: Key competitors of FEUR include:

• iShares MSCI Europe ETF (IEUR) with a market share of 20.5%
• Vanguard FTSE Europe ETF (VGK) with a market share of 12.2%

Expense Ratio: FEUR has an expense ratio of 0.75%, which is slightly higher than the average for actively managed European equity ETFs.

Investment Approach and Strategy:

• Strategy: FEUR actively manages its portfolio, employing the AlphaDEX® methodology to select stocks with high potential for capital appreciation.
• Composition: The fund primarily invests in large- and mid-cap European stocks across various sectors, excluding the UK.

Key Points:

• Actively managed European equity ETF with a focus on outperformance.
• Employs the proprietary AlphaDEX® quantitative model for stock selection.
• Historically outperformed its benchmark index.
• Suitable for investors seeking exposure to European equities with the potential for above-average returns.

Risks:

• Volatility: FEUR is an actively managed ETF and may experience higher volatility compared to passively managed index-tracking ETFs.
• Market Risk: The fund's performance is directly tied to the performance of European equities, which can be affected by various economic and market factors.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation from European equities.
• Investors comfortable with the higher volatility associated with actively managed ETFs.
• Investors who believe in the potential of the AlphaDEX® methodology to generate superior returns.

Fundamental Rating Based on AI: 7/10

FEUR exhibits strong fundamentals, including a robust track record, experienced management, and a differentiated investment strategy. However, its relatively small size and lower liquidity may be drawbacks for some investors. The overall rating of 7 reflects a balance between these strengths and weaknesses.

Resources and Disclaimers:

• Data Sources:
  • First Trust website: https://www.ftportfolios.com/
  • ETF.com: https://www.etf.com/
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.