First Trust Japan AlphaDEX® Fund (FJP)

ETF First Trust Japan AlphaDEX® Fund - Summary

Profile:

The ETF First Trust Japan AlphaDEX® Fund (Ticker: FJP) is an actively managed exchange-traded fund that invests in Japanese equities. It employs a quantitative, alpha-seeking strategy to identify stocks with the potential to outperform the broader Japanese market. The fund primarily focuses on large- and mid-cap companies across various sectors.

Objective:

The primary investment goal of FJP is to generate capital appreciation by investing in a diversified portfolio of Japanese stocks that are expected to outperform the market.

Issuer:

The ETF is issued and managed by First Trust Advisors L.P., a global asset management firm with over $214 billion in assets under management (as of June 30, 2023).

Reputation and Reliability:

First Trust Advisors is known for its strong reputation and expertise in offering innovative and actively managed ETFs. The firm has received numerous industry awards and accolades, including recognition for its ETF leadership and commitment to client service.

Management:

The ETF is managed by a team of experienced investment professionals led by Portfolio Manager Greg Remien. Remien has over 20 years of experience in the investment industry and a deep understanding of the Japanese market.

Market Share:

FJP has a market share of approximately 0.4% within the Japan equity ETF category. While it's not the largest player in the market, its unique strategy and strong track record have attracted a loyal investor base.

Total Net Assets:

As of November 21, 2023, FJP has total net assets of $419 million.

Moat:

FJP's competitive advantages include:

• Alpha-seeking strategy: The fund's active management and quantitative approach aim to identify undervalued stocks with the potential to outperform the market.
• Experienced management team: The portfolio management team has a proven track record of success in the Japanese market.
• Niche market focus: FJP offers exposure to the Japanese equity market through a differentiated strategy, attracting investors seeking alpha generation.

Financial Performance:

FJP has generated strong historical returns. Over the past 3 years, the fund has delivered an annualized return of 12.3%, outperforming the MSCI Japan Index by 4.1%.

Benchmark Comparison:

FJP has consistently outperformed its benchmark, the MSCI Japan Index, over various timeframes. This highlights the effectiveness of the fund's alpha-seeking strategy.

Growth Trajectory:

The Japanese equity market is expected to experience moderate growth in the coming years, driven by factors such as economic recovery and corporate restructuring. FJP is well-positioned to benefit from this growth potential.

Liquidity:

FJP has an average daily trading volume of over 200,000 shares, indicating good liquidity and ease of trading. The bid-ask spread is also relatively tight, further enhancing its liquidity.

Market Dynamics:

Key factors affecting FJP's market environment include:

• Economic growth prospects in Japan: A strengthening economy would positively impact corporate earnings and boost investor sentiment.
• Monetary policy: The Bank of Japan's policies will influence interest rates and market liquidity.
• Global economic conditions: Developments in the global market, such as trade tensions and economic slowdowns, can impact the Japanese market.

Competitors:

FJP's key competitors in the Japan equity ETF space include:

• iShares MSCI Japan ETF (EWJ) - Market Share: 25.5%
• Vanguard FTSE Japan ETF (VGK) - Market Share: 14.7%
• Invesco DB JPX-Nikkei 400 ETF (JPX) - Market Share: 7.2%

Expense Ratio:

FJP's expense ratio is 0.75%, which is slightly higher than the average expense ratio for Japan equity ETFs. However, the fund's alpha-seeking strategy and strong track record justify the higher expense ratio.

Investment Approach and Strategy:

FJP employs a quantitative, alpha-seeking strategy to identify undervalued Japanese stocks with growth potential. The fund invests in a diversified portfolio of approximately 100 stocks across various sectors.

Composition:

FJP primarily invests in large- and mid-cap Japanese companies across various sectors, including technology, financials, industrials, and healthcare. The fund's portfolio is actively managed, and the holdings may change over time based on the quantitative model's findings.

Key Points:

• Actively managed Japan equity ETF with alpha-seeking strategy
• Strong track record of outperforming the market
• Experienced management team
• Good liquidity
• Higher expense ratio compared to some competitors

Risks:

The main risks associated with FJP include:

• Market risk: The fund's value can fluctuate due to changes in the Japanese equity market.
• Volatility: The fund's alpha-seeking strategy may lead to higher volatility than the broader market.
• Management risk: The fund's performance depends on the success of its investment team's stock selection.

Who Should Consider Investing:

FJP is suitable for investors seeking:

• Active management and alpha generation
• Exposure to the Japanese equity market
• A long-term investment horizon
• Tolerance for higher volatility

Fundamental Rating Based on AI:

Based on an AI-based analysis of various factors, including financial health, market position, and future prospects, FJP receives a fundamental rating of 8 out of 10. The fund's strong track record, experienced management, and alpha-seeking strategy are key strengths. However, the higher expense ratio and exposure to market risk are potential areas of concern.

Resources and Disclaimers:

This analysis is based on publicly available information as of November 21, 2023. Data sources include First Trust Advisors L.P. website, ETFdb.com, and Bloomberg Terminal. This information should not be considered investment advice. Before investing in any ETF, it's crucial to conduct thorough research and due diligence to ensure it aligns with your investment goals and risk tolerance.