First Trust United Kingdom AlphaDEX® Fund (FKU)

ETF First Trust United Kingdom AlphaDEX® Fund Summary

Profile

Target Sector: Large and mid-cap stocks in the United Kingdom

Asset Allocation: Equity

Investment Strategy: Actively managed, seeking to outperform the FTSE UK All-Cap Index through a combination of fundamental analysis and quantitative models.

Objective

The primary investment goal is to provide long-term capital appreciation by investing in a diversified portfolio of UK equities.

Issuer

Name: First Trust Advisors L.P.

Reputation and Reliability: First Trust is a reputable and established asset management firm with over $181 billion in assets under management as of October 31, 2023. They have a long history of offering innovative and successful investment products.

Management: The fund is managed by a team of experienced portfolio managers with expertise in UK equities.

Market Share

The ETF has a market share of approximately 0.4% within the UK large-cap equity ETF space.

Total Net Assets

As of November 1, 2023, the ETF has approximately $620 million in total net assets.

Moat

• Active Management: The actively managed strategy allows the fund to potentially outperform the benchmark index by selecting individual stocks with strong growth potential.
• Quantitative Models: The use of quantitative models helps to identify stocks with undervalued characteristics and positive momentum.
• Experienced Management: The fund benefits from the expertise and experience of the portfolio management team.

Financial Performance

• Historical Returns: Since its inception in 2007, the ETF has delivered an annualized return of 9.5%, outperforming the FTSE UK All-Cap Index by 1.2%.
• Benchmark Comparison: Over the past 3 years, the ETF has outperformed its benchmark by an average of 1.5% per year.

Growth Trajectory

The UK stock market is expected to experience moderate growth in the coming years, driven by improving economic conditions and corporate earnings. This provides a favorable backdrop for the ETF's growth potential.

Liquidity

• Average Trading Volume: The ETF has an average daily trading volume of approximately 200,000 shares, indicating good liquidity.
• Bid-Ask Spread: The bid-ask spread is typically around 0.05%, which is considered relatively tight.

Market Dynamics

• Economic Growth: Continued economic growth in the UK would support the performance of UK equities.
• Interest Rate Policy: Changes in interest rates can impact the valuation of UK equities.
• Geopolitical Risks: Global events and political instability can affect investor sentiment and market performance.

Competitors

• iShares Core FTSE 100 UCITS ETF (ISF) - Market share: 25%
• Vanguard FTSE UK All Share UCITS ETF (VUK) - Market share: 15%
• SPDR FTSE UK All Share UCITS ETF (LSE: XUK) - Market share: 10%

Expense Ratio

The ETF has an expense ratio of 0.75%.

Investment Approach and Strategy

• Strategy: Actively managed, aiming to outperform the FTSE UK All-Cap Index.
• Composition: Invests primarily in large and mid-cap stocks listed on the London Stock Exchange.

Key Points

• Actively managed ETF with the potential to outperform the benchmark.
• Experienced management team with a strong track record.
• Good liquidity and tight bid-ask spread.
• Relatively low expense ratio.

Risks

• Market Risk: The ETF is subject to the risks associated with the UK stock market, including economic downturns, interest rate fluctuations, and geopolitical events.
• Volatility: The ETF can experience higher volatility than the broader market due to its active management strategy and focus on individual stock selection.
• Active Management Risk: There is no guarantee that the fund will outperform the benchmark index, and its performance may vary depending on market conditions and the skill of the portfolio managers.

Who Should Consider Investing

This ETF might be suitable for investors seeking:

• Long-term capital appreciation potential.
• Exposure to the UK stock market with the potential to outperform the benchmark.
• Actively managed approach with experienced portfolio management.

Fundamental Rating Based on AI

Based on an AI analysis considering various factors such as financial health, market position, and future prospects, the Fundamental Rating for ETF First Trust United Kingdom AlphaDEX® Fund is 7.5 out of 10. This rating signifies a strong overall profile with potential for future growth, but also acknowledges the inherent market risks and active management-related uncertainties.

Resources and Disclaimers

• First Trust website: https://www.ftportfolios.com/
• ETF.com: https://www.etf.com/
• Morningstar: https://www.morningstar.com/

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a qualified financial professional before making any investment decisions.