First Trust Latin America AlphaDEX® Fund (FLN)

Overview

The First Trust Latin America AlphaDEXu00ae Fund (LAAC) is an actively managed ETF that seeks to provide capital appreciation by investing in a dynamically selected portfolio of equity securities of companies that exhibit strong performance characteristics, selected using the proprietary AlphaDEXu00ae methodology. It focuses on companies domiciled in or with significant operations in Latin American countries.

Reputation and Reliability

First Trust is a well-established ETF provider known for its diverse range of actively managed and index-tracking ETFs. They have a solid track record and are generally considered a reliable issuer in the US ETF market.

Management Expertise

The ETF is managed by First Trust Advisors L.P., which employs a team of investment professionals with experience in managing various equity and fixed income strategies, including emerging markets.

Goal

To achieve capital appreciation for investors by investing in companies with strong fundamental characteristics and growth potential within Latin America.

Investment Approach and Strategy

Strategy: This ETF does not track a specific index. Instead, it utilizes an active management strategy, applying the AlphaDEXu00ae methodology to select stocks based on quantitative factors such as growth, value, momentum, and quality.

Composition The ETF's composition primarily consists of equities (stocks) of companies operating in Latin American countries. The specific holdings are dynamically adjusted based on the AlphaDEXu00ae methodology's rankings.

Market Share: Specific market share data for LAAC within the Latin America ETF sector is not readily available as a distinct percentage, as it's an actively managed fund and not directly comparable to passive index ETFs in terms of direct market share. Its AUM is a more indicative measure of its standing.

Total Net Assets (AUM): [object Object]

Key Competitors

• iShares MSCI Brazil ETF (EWZ)
• iShares MSCI Mexico ETF (EWW)
• Global X MSCI Colombia ETF (GXG)

Competitive Landscape

The Latin America ETF market is dominated by a few large, passive index-tracking ETFs that focus on major Latin American economies like Brazil and Mexico. LAAC, as an actively managed fund with a unique selection methodology, aims to differentiate itself by actively seeking out undervalued or high-performing stocks, rather than passively tracking an index. Its advantage lies in its potential to outperform through active stock selection, while its disadvantage is the higher expense ratio and the risk associated with active management underperformance compared to broad index trackers.

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Benchmark Comparison: LAAC's performance has been mixed when compared to broad Latin America indices. While it may outperform in certain market conditions due to its AlphaDEXu00ae selection criteria, it has also lagged behind in others. Investors should review specific benchmark performance for detailed comparisons.

Expense Ratio: 0.73

Average Trading Volume

The ETF exhibits moderate average daily trading volume, which suggests adequate liquidity for most retail investors but may be less liquid for institutional traders.

Bid-Ask Spread

The bid-ask spread for LAAC is generally tight, indicating efficient trading and low transaction costs for investors entering and exiting positions.

Market Environment Factors

LAAC is influenced by a range of factors including commodity prices, political stability in Latin American countries, global economic growth, interest rate policies of major central banks, and currency fluctuations. Recent market conditions have presented challenges due to global economic uncertainty and specific regional political events.

Growth Trajectory

The growth trajectory of LAAC is tied to the broader economic performance of Latin America and the effectiveness of its proprietary AlphaDEXu00ae methodology in identifying growth opportunities. Changes in strategy and holdings are dynamic and driven by the AlphaDEXu00ae model's output.

Competitive Edge

The primary competitive edge of LAAC lies in its proprietary AlphaDEXu00ae selection methodology, which aims to identify stocks with superior fundamental characteristics. This active approach allows for dynamic adjustments to the portfolio, potentially capturing upside from mispriced securities or companies exhibiting strong growth patterns that might be overlooked by passive strategies. The focus on Latin America also positions it as a specialized play in an often-volatile emerging market region.

Volatility

LAAC has historically exhibited higher volatility compared to broader U.S. equity markets, which is typical for emerging market ETFs. This volatility is influenced by the inherent risks of the underlying countries and companies.

Market Risk

Specific market risks for LAAC include political instability in Latin American countries, currency devaluation, economic downturns, and reliance on commodity prices. The concentrated nature of emerging markets can amplify these risks.

Ideal Investor Profile

The ideal investor for LAAC is one with a higher risk tolerance, a belief in the growth potential of Latin America, and a desire for actively managed exposure to the region. Investors should be comfortable with emerging market volatility and have a long-term investment horizon.

Market Risk

LAAC is best suited for investors seeking opportunistic growth in emerging markets and who are comfortable with the higher risk and potential reward associated with actively managed emerging market equity funds. It is less suitable for conservative investors or those seeking purely passive, broad-market exposure.

The First Trust Latin America AlphaDEXu00ae Fund (LAAC) is an actively managed ETF offering exposure to Latin American equities using a proprietary quantitative selection methodology. It aims for capital appreciation by identifying companies with strong fundamental characteristics. While it faces competition from larger passive ETFs, its active approach and specialized focus are key differentiators. Investors should be aware of the inherent volatility and market risks associated with emerging markets.

Data Sources:

• First Trust Investments
• Financial Data Providers (e.g., Morningstar, Bloomberg)

Disclaimers:

This information is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investors should consult with a qualified financial advisor before making any investment decisions. Data on AUM, market share, and historical performance can fluctuate.