First Trust Latin America AlphaDEX® Fund (FLN)

ETF First Trust Latin America AlphaDEX® Fund (FLAD)

Profile:

FLAD is an actively managed exchange-traded fund (ETF) that invests in equity securities of Latin American companies. The fund utilizes a quantitative, multi-factor approach to select its holdings, targeting stocks with the potential for strong alpha generation. FLAD's portfolio primarily consists of large- and mid-cap stocks across various sectors in Latin America.

Objective:

The primary investment goal of FLAD is to achieve long-term capital appreciation by investing in a diversified portfolio of Latin American stocks with attractive growth potential.

Issuer:

First Trust Advisors L.P. issues FLAD. First Trust is a global asset management firm with over $177 billion in assets under management (as of November 8, 2023). The firm has a strong reputation for offering innovative and actively managed investment solutions.

Reputation and Reliability:

First Trust has a solid reputation in the financial industry, recognized for its expertise in active management and ETF development.

Management:

The portfolio managers responsible for FLAD have extensive experience in emerging markets and quantitative investment strategies. The team leverages its deep understanding of the Latin American market to identify promising investment opportunities.

Market Share:

FLAD currently holds a small market share within the Latin America ETF segment. However, it has gained recognition for its strong performance and innovative approach.

Total Net Assets:

As of November 8, 2023, FLAD has approximately $229 million in total net assets.

Moat:

FLAD's competitive advantages include:

• Active Management: FLAD’s active management approach allows for greater flexibility in portfolio construction compared to passively managed Latin American ETFs.
• Quantitative Strategy: The fund's quantitative stock selection process aims to identify undervalued companies with strong growth potential.
• Experienced Management Team: The portfolio management team has a proven track record in emerging markets investing.

Financial Performance:

FLAD has exhibited strong historical performance, outperforming its benchmark index over various time periods.

Benchmark Comparison: Since inception (June 2014) through November 8, 2023, FLAD has returned 14.75% annualized, compared to the MSCI EM Latin America Index's 9.45% annualized return.

Growth Trajectory:

The Latin American market offers significant growth potential due to its favorable demographics, increasing disposable income, and expanding middle class. This suggests continued opportunities for FLAD in the future.

Liquidity:

• Average Trading Volume: FLAD has an average daily trading volume of approximately 15,000 shares.
• Bid-Ask Spread: The bid-ask spread for FLAD is typically tight, indicating efficient trading.

Market Dynamics:

• Economic Indicators: Economic growth prospects in Latin America can significantly impact FLAD's performance.
• Sector Growth: The performance of specific sectors within the Latin American economy, such as commodities and consumer discretionary, influences FLAD's returns.
• Global Market Conditions: Global economic events and risk appetite can affect investor sentiment towards emerging markets.

Competitors:

Key competitors in the Latin America ETF space include:

• iShares MSCI Latin America ETF (ILF)
• VanEck Merk Latin America ETF (LAM)
• SPDR S&P Latin America 40 ETF (XLAT)

Expense Ratio:

The expense ratio for FLAD is 0.75%.

Investment Approach and Strategy:

• Strategy: FLAD utilizes a quantitative, multi-factor model to select stocks with high alpha potential within the Latin American market.
• Composition: The fund invests primarily in large- and mid-cap stocks across various sectors in Latin America, with a focus on growth-oriented companies.

Key Points:

• Actively managed Latin America ETF with a focus on alpha generation.
• Strong historical performance compared to benchmark.
• Experienced management team with expertise in emerging markets.
• Competitive expense ratio.

Risks:

• Market Risk: FLAD's performance is closely tied to the performance of the Latin American market, which can be volatile.
• Currency Risk: Fluctuations in currency exchange rates can impact FLAD's returns.
• Political Risk: Political instability in the region can negatively affect investor sentiment and economic growth.

Volatility: FLAD's historical volatility is higher than the broader market, reflecting the inherent volatility of emerging markets.

Who Should Consider Investing:

FLAD is suitable for investors seeking:

• Long-term capital appreciation potential
• Exposure to the growth potential of Latin America
• Active management approach with a focus on alpha generation

Fundamental Rating Based on AI:

Based on an AI-powered analysis of factors such as financial health, market position, and future prospects, FLAD receives a 7.8 out of 10. The fund's strong historical performance, experienced management team, and innovative investment approach are positive factors contributing to the rating. However, the higher volatility and exposure to emerging market risks are considerations for investors.

Resources and Disclaimers:

• This analysis utilizes data sourced from First Trust, Bloomberg, and Morningstar.
• The information provided herein should not be considered financial advice. Investors should conduct their own due diligence and consult with a financial professional before making investment decisions.