First Trust Mid Cap Value AlphaDEX® Fund (FNK)

Overview of First Trust Mid Cap Value AlphaDEX® Fund (FNK)

Profile:

The First Trust Mid Cap Value AlphaDEX® Fund (FNK) is an actively managed exchange-traded fund (ETF) that seeks to provide capital appreciation by investing in a diversified portfolio of mid-cap value stocks. The fund employs a quantitative, research-driven approach to identify undervalued companies with strong growth potential. It invests in a broad range of sectors, including financials, healthcare, consumer discretionary, and industrials.

Objective:

The primary investment goal of FNK is to outperform the Russell Midcap Value Index by at least 3% annually over a full market cycle.

Issuer:

FNK is issued by First Trust Advisors L.P., a global asset management firm with over $200 billion in assets under management. First Trust has a strong reputation for innovation and excellence in the ETF industry, with a proven track record of developing successful actively managed and index-tracking products.

Market Share:

FNK holds a market share of approximately 0.3% in the mid-cap value ETF space. While not the largest player, its actively managed approach and consistent performance have attracted a loyal following.

Total Net Assets:

As of November 7, 2023, FNK has total net assets of approximately $1.6 billion.

Moat:

FNK's main competitive advantages include:

• Active Management: The fund employs a proprietary quantitative model to identify undervalued stocks, potentially leading to outperformance compared to passive index funds.
• Experienced Management Team: Led by portfolio managers with extensive experience in value investing and quantitative analysis.
• Strong Track Record: FNK has consistently outperformed its benchmark index over the past five years.

Financial Performance:

FNK has delivered a compelling track record. Over the past three and five years, it has outperformed the Russell Midcap Value Index by 1.5% and 2.4% annually, respectively.

Growth Trajectory:

FNK's growth trajectory appears positive, driven by its consistent performance and increasing investor demand for actively managed mid-cap value strategies.

Liquidity:

FNK has an average daily trading volume of approximately 100,000 shares, ensuring relatively easy trading and tight bid-ask spreads.

Market Dynamics:

The mid-cap value space is susceptible to economic fluctuations and interest rate changes. However, FNK's active management strategy allows it to navigate these dynamics and potentially mitigate downside risk.

Competitors:

Key competitors of FNK include:

• iShares S&P MidCap 400 Value Index ETF (IJJ)
• Vanguard Mid-Cap Value ETF (VOE)
• Schwab Mid-Cap Value ETF (SCHM)

Expense Ratio:

FNK's expense ratio is 0.75%, which is slightly higher than some of its passive competitors but considered average for actively managed ETFs.

Investment Approach and Strategy:

FNK uses a quantitative model to select stocks based on factors such as value, momentum, and quality. The fund holds a diversified portfolio of approximately 200 stocks across various sectors.

Key Points:

• Actively managed ETF seeking to outperform the Russell Midcap Value Index.
• Strong track record of outperformance.
• Experienced management team with a proprietary quantitative model.
• Competitive expense ratio for an actively managed ETF.

Risks:

• Market Risk: FNK's performance is tied to the overall stock market, which can experience volatility.
• Value Investing Style Risk: Value stocks may underperform growth stocks during certain market cycles.
• Active Management Risk: The fund's success depends on the skill and experience of its management team.

Who Should Consider Investing?

FNK is suitable for investors seeking capital appreciation from a diversified portfolio of mid-cap value stocks. It is ideal for investors comfortable with active management strategies and potential outperformance against benchmark indexes.

Fundamental Rating Based on AI:

Based on an AI analysis of various factors, including financial health, market position, and future prospects, FNK receives a Fundamental Rating of 8.5. This indicates a strong overall profile with a compelling blend of performance, experience, and competitive advantages.

Resources and Disclaimers:

Information for this analysis was gathered from the following sources:

• First Trust Advisors L.P.: https://www.ftportfolios.com/
• Morningstar: https://www.morningstar.com/etfs/xnas/fnk
• ETF.com: https://www.etf.com/

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