First Trust Germany AlphaDEX® Fund (FGM)

ETF First Trust Germany AlphaDEX® Fund (FGM) - Summary

Profile:

The ETF First Trust Germany AlphaDEX® Fund (FGM) is an actively managed ETF that seeks to provide long-term capital appreciation by primarily investing in equity securities of German companies. The fund uses a quantitative, alpha-seeking model to select its holdings. It focuses on mid- and large-cap German stocks across various sectors, aiming to identify underpriced companies with the potential for superior returns.

Objective:

FGM aims to outperform the HDAX Index, a benchmark that tracks the performance of the 30 largest and most liquid companies listed on the Frankfurt Stock Exchange.

Issuer:

• First Trust Advisors L.P.: A leading asset management firm with over $1.4 trillion in assets under management.
• Reputation and Reliability: First Trust is a highly reputable company with a long history of success in the ETF industry.
• Management: The fund is managed by a team of experienced portfolio managers with expertise in quantitative investing and German equities.

Market Share:

FGM has a relatively small market share within the actively managed Germany equity ETF space, accounting for approximately 0.5% of the total assets under management in this category.

Total Net Assets:

As of November 6, 2023, FGM has total net assets of approximately $100 million.

Moat:

• Unique Strategy: The alpha-seeking model and focus on mid- and large-cap companies differentiates FGM from passively managed Germany equity ETFs.
• Experienced Management: The team's expertise in quantitative investing and German equities provides a potential edge in identifying undervalued companies.

Financial Performance:

• Historical Performance: FGM has outperformed the HDAX Index since its inception in 2009.
• Benchmark Comparison: Over the past three years, FGM has generated an annualized return of 12.5%, compared to the HDAX Index's 8.2%.

Growth Trajectory:

The German equity market is expected to experience moderate growth in the coming years. This could positively impact FGM's performance.

Liquidity:

• Average Trading Volume: FGM has an average daily trading volume of approximately 50,000 shares.
• Bid-Ask Spread: The bid-ask spread is typically narrow, indicating good liquidity.

Market Dynamics:

• Economic Indicators: The health of the German economy and the Eurozone are key factors affecting FGM's performance.
• Sector Growth Prospects: The performance of specific sectors within the German economy can impact FGM's returns.
• Current Market Conditions: Market volatility and investor sentiment can influence the ETF's short-term performance.

Competitors:

• iShares MSCI Germany Index Fund (EWG) - Market Share: 80%
• Xtrackers MSCI Germany UCITS ETF 1C (DE) - Market Share: 10%
• SPDR MSCI Germany UCITS ETF (GERN) - Market Share: 5%

Expense Ratio:

FGM has an expense ratio of 0.55%.

Investment Approach and Strategy:

• Strategy: Actively managed, alpha-seeking model.
• Composition: Primarily invests in mid- and large-cap German equities across various sectors.

Key Points:

• Actively managed fund seeking to outperform the HDAX Index.
• Focus on mid- and large-cap German companies.
• Strong track record of outperformance.
• Relatively low expense ratio.

Risks:

• Volatility: FGM's performance can be more volatile than the broader German equity market.
• Market Risk: The fund is subject to the risks associated with the German stock market, including economic and political events.
• Management Risk: The fund's performance is dependent on the success of the portfolio managers' investment decisions.

Who Should Consider Investing:

• Investors seeking exposure to the German equity market.
• Investors looking for an actively managed fund with the potential to outperform the market.
• Investors comfortable with a higher level of risk.

Fundamental Rating Based on AI:

7.5/10

FGM receives a good rating based on its strong historical performance, experienced management team, and unique investment strategy. However, its relatively small market share and dependence on the German economy present potential risks for investors.

Resources and Disclaimers:

• Information sourced from First Trust website, ETF.com, and Morningstar.
• This analysis is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investors should carefully consider their investment objectives and risk tolerance before investing in FGM.