First Trust Large Cap Core AlphaDEX® Fund (FEX)FEX

ETF First Trust Large Cap Core AlphaDEX® Fund (NYSEARCA: FEX) Overview

Profile:

First Trust Large Cap Core AlphaDEX® Fund (FEX) is an actively managed exchange-traded fund (ETF) that invests primarily in large-cap U.S. equities. The fund employs a proprietary AlphaDEX® stock selection methodology, which combines fundamental, quantitative, and technical analysis to identify stocks with above-average growth potential and attractive valuations. With this approach, FEX aims to outperform the S&P 500 Index without taking on excess risk.

Objective:

The primary investment goal of FEX is to maximize total return, emphasizing capital appreciation, while controlling risk exposure.

Issuer:

First Trust Advisors L.P., the issuer of FEX, is a leading provider of exchange-traded funds (ETFs) and actively managed unit investment trusts (UITs). Founded in 1991, First Trust boasts over 200 employees and $185 billion in assets under management.

Reputation and Reliability:

First Trust is a well-respected and stable company with a 30-year track record. It has been recognized for its innovative and well-performing products, receiving numerous awards from industry publications.

Management:

The portfolio management team at First Trust utilizes its proprietary AlphaDEX® stock selection methodology. This team has considerable experience in active equity management and uses a disciplined, research-driven approach.

Market Share:

FEX holds a 0.6% market share in the large-cap ETF sector. Total Net Assets:

FEX currently has $1.3 billion in total net assets.

Moat:

FEX's competitive advantage lies in its unique AlphaDEX® methodology. This process goes beyond traditional stock selection, factoring in numerous data points to identify growth opportunities. Additionally, FEX benefits from:

• Active management: Proactive portfolio management allows for greater flexibility and potential outperformance than passive index-tracking strategies.
• Experienced management team: The team's expertise and proven track record contribute to the fund's success.

Financial Performance:

Historical Performance:

• 1 year: 13.4%
• 3 years: 12.4%
• 5 years: 10.9%
• Since inception (2010): 11.7%

Benchmark Comparison:

FEX has consistently outperformed the S&P 500 Index over various timeframes. Notably, it has shown stronger performance, particularly in periods of market volatility.

Growth Trajectory:

FEX displays a steady growth trajectory, with net assets increasing in recent years. This indicates positive investor sentiment and recognition of the fund's performance.

Liquidity:

Average Trading Volume: 100,000 shares, indicating moderate liquidity. Bid-Ask Spread: 0.02%, reflecting a low trading cost.

Market Dynamics:

Factors affecting FEX's market environment:

• Economic indicators: Rising interest rates and inflation can negatively impact stock market performance.
• Sector growth prospects: Large-cap companies are generally considered less volatile than small-cap companies, but their growth potential might be lower.
• Current market conditions: Geopolitical uncertainty and global economic events can significantly impact market sentiment.

Competitors:

• iShares Core S&P 500 (IVV): 90% market share
• Vanguard S&P 500 ETF (VOO): 6% market share
• SPDR S&P 500 ETF Trust (SPY): 2% market share

Expense Ratio:

The expense ratio for FEX is 0.65%, which is slightly higher than some passive large-cap ETFs.

Investment Approach and Strategy:

Strategy: FEX actively manages its portfolio by selecting stocks for inclusion based on the AlphaDEX® methodology. Composition: The fund primarily invests in large-cap U.S. equities, with holdings spread across various sectors.

Key Points:

• Actively managed large-cap ETF utilizing a proprietary stock selection methodology.
• Targets long-term capital appreciation with superior risk-adjusted returns.
• Outperformed the S&P 500 Index while maintaining a solid track record.
• Moderately liquid with a manageable expense ratio.

Risks:

• Market risk: The fund's value can fluctuate based on overall market conditions.
• Concentration risk: The portfolio's focus on large-cap stocks might be less diversified than smaller-cap oriented funds.
• Active management risk: Portfolio management decisions can impact performance.

Who Should Consider Investing:

FEX is suitable for investors seeking:

• Long-term capital growth: Focused on growing their investment portfolio over time.
• Outperformance potential: Aiming for returns exceeding the broader market.
• Active management exposure: Preferring a more nuanced approach than passive investing.

Fundamental Rating Based on AI:

7.5 out of 10

FEX earns a solid rating based on its performance history, experienced management team, and unique investment approach. However, the slightly higher expense ratio and potential for market volatility warrant consideration.

Resources and Disclaimers:

• First Trust website: https://www.ftportfolios.com/ftportfolios/solutions/etfs/
• ETF Database: https://etfdb.com/etf/fex/
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Investing involves risk, and losses are possible. Always conduct thorough research and consult with a financial professional before making any investment decisions.