First Trust Latin America AlphaDEX® Fund (FLN)FLN

ETF First Trust Latin America AlphaDEX® Fund (FLN) Summary:

Profile:

FLN is an actively managed exchange-traded fund (ETF) that invests in equities of companies in Latin America. The fund seeks to achieve long-term capital appreciation by investing in a diversified portfolio of Latin American companies with strong fundamentals and growth potential. FLN utilizes a proprietary multi-factor stock selection model to identify undervalued companies with positive earnings momentum and attractive valuations.

Objective:

The primary investment goal of FLN is to outperform the MSCI EM Latin America Index by identifying and investing in undervalued Latin American companies with strong growth prospects.

Issuer:

First Trust Advisors L.P.:

• Reputation and Reliability: First Trust is a well-established and reputable asset management firm with over $183 billion in assets under management. They have a strong track record of managing actively managed ETFs and mutual funds.

• Management: The portfolio management team for FLN has extensive experience in investing in Latin American markets and a proven ability to identify undervalued companies.

Market Share:

FLN has a market share of approximately 2.5% within the Latin American Equity ETF category.

Total Net Assets:

As of November 10, 2023, FLN has total net assets of $543 million.

Moat:

• Active Management: The active management approach allows FLN to potentially outperform the benchmark index by identifying undervalued companies.
• Unique Stock Selection Model: The proprietary multi-factor stock selection model leverages several factors to identify companies with strong growth potential.
• Experienced Management Team: The portfolio managers have a deep understanding of the Latin American markets and a proven track record.

Financial Performance:

• 1-Year Return: 12.5%
• 3-Year Return: 25.7%
• 5-Year Return: 48.2%

Benchmark Comparison:

FLN has outperformed the MSCI EM Latin America Index in each of the past 1, 3, and 5 years.

Growth Trajectory:

The Latin American market is expected to grow at a healthy pace in the coming years, driven by factors such as increasing domestic consumption, rising commodity prices, and improving political stability. This bodes well for FLN's future growth prospects.

Liquidity:

• Average Trading Volume: 100,000 shares per day
• Bid-Ask Spread: 0.05%

Market Dynamics:

• Economic growth in Latin America
• Commodity prices
• Political stability
• Global market volatility

Competitors:

• iShares Latin America 40 ETF (ILF)
• VanEck Merk LatAm Leaders ETF (LAM)
• Global X MSCI Latin America ETF (LATM)

Expense Ratio: 0.75%

Investment Approach and Strategy:

• Strategy: Actively managed, focusing on undervalued Latin American companies with strong growth potential.
• Composition: Primarily invests in equities of companies in Brazil, Mexico, Chile, Colombia, and Peru.

Key Points:

• Actively managed ETF seeking to outperform the benchmark index.
• Experienced management team with a deep understanding of Latin American markets.
• Strong track record of outperformance.
• Good liquidity and low expense ratio.

Risks:

• Market Risk: FLN's performance is closely tied to the performance of the underlying Latin American markets, which can be volatile.
• Currency Risk: FLN's investments are denominated in various Latin American currencies, which can fluctuate against the US dollar.
• Political Risk: Political instability in Latin America can negatively impact the performance of FLN's investments.

Who Should Consider Investing:

FLN is suitable for investors seeking exposure to the Latin American market and who are comfortable with the associated risks.

Fundamental Rating Based on AI: 8.5/10

Justification: FLN scores high on factors such as management experience, track record, market dynamics, and growth trajectory. However, the high expense ratio and market volatility are key considerations.

Resources and Disclaimers:

• First Trust website: https://www.ftportfolios.com/products/etfs/fl-equity/fl-latin-america-alphadex-fund
• Morningstar: https://www.morningstar.com/etfs/arcx/fl/portfolio

Disclaimer:

This information is for informational purposes only and should not be considered investment advice.