First Trust Mid Cap Core AlphaDEX® Fund (FNX)FNX

ETF First Trust Mid Cap Core AlphaDEX® Fund (FNX) - Summary

Profile:

• Focus: First Trust Mid Cap Core AlphaDEX® Fund (FNX) is a passively managed ETF that invests in a diversified portfolio of mid-capitalization U.S. stocks. It tracks the Solactive Alpha Factor Mid Cap Index and uses a quantitative, multi-factor approach to select stocks.
• Asset Allocation: Invests primarily in equities, specifically mid-cap stocks (~90%).
• Investment Strategy: Employs an alphaDEX investment strategy that seeks to maximize returns by identifying mispriced securities and capturing alpha (excess return over the benchmark).

Objective:

• The primary objective of FNX is to provide capital appreciation over the long term by investing in mid-cap stocks with high alpha potential.

Issuer:

• First Trust Advisors L.P.: A leading provider of exchange-traded funds (ETFs), with over $280 billion in assets under management (AUM).
• Reputation and Reliability: First Trust has a strong reputation for offering innovative and high-quality investment products. Their ETFs are known for their transparency and liquidity.
• Management: The portfolio management team has extensive experience in quantitative analysis and factor investing.

Market Share:

• FNX has a market share of approximately 0.4% in the mid-cap core ETF category.

Total Net Assets:

• As of October 26, 2023, FNX has total net assets of over $1.3 billion.

Moat:

• Quantitative Investment Strategy: FNX's alphaDEX approach provides a potentially differentiated way to capture alpha and outperform the market.
• Experienced Management: The team's expertise in factor investing and quantitative analysis offers a competitive edge.

Financial Performance:

• Historical Returns: FNX has delivered strong historical returns, outperforming the S&P MidCap 400 Index over the past 3 and 5 years.
• Benchmark Comparison: FNX has consistently outperformed its benchmark index, demonstrating the effectiveness of its alpha-seeking strategy.

Growth Trajectory:

• The mid-cap market is expected to continue growing in the coming years, driven by economic expansion and increasing investor interest.

Liquidity:

• Average Trading Volume: FNX has an average daily trading volume of over 100,000 shares, ensuring high liquidity.
• Bid-Ask Spread: The bid-ask spread is tight, indicating low transaction costs.

Market Dynamics:

• Factors like economic growth, interest rate changes, and sector performance can influence the mid-cap market and FNX's performance.

Competitors:

• Key competitors include iShares S&P Mid-Cap 400 Value ETF (IJJ), Vanguard Mid-Cap Value ETF (VOE), and Schwab Mid-Cap ETF (SCHM).

Expense Ratio:

• The expense ratio of FNX is 0.60%, which is below the average for mid-cap core ETFs.

Investment Approach and Strategy:

• Strategy: FNX passively tracks the Solactive Alpha Factor Mid Cap Index, which selects stocks based on quantitative factors like value, momentum, and quality.
• Composition: The portfolio holds approximately 250 mid-cap stocks across various sectors.

Key Points:

• Passively managed ETF focusing on mid-cap stocks with alpha potential.
• Employs a quantitative, multi-factor approach to stock selection.
• Strong historical performance and outperformance against the benchmark index.
• High liquidity and competitive expense ratio.

Risks:

• Market Volatility: The mid-cap market can be volatile, leading to fluctuations in FNX's price.
• Factor Investing Risk: The alphaDEX strategy may not consistently outperform the market.
• Specific Stock Risk: The performance of individual stocks in the portfolio can impact FNX's returns.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to mid-cap stocks.
• Investors comfortable with moderate risk and market volatility.
• Investors looking for an alternative to traditional index-tracking mid-cap ETFs.

Fundamental Rating Based on AI:

8.5/10

FNX's strong historical performance, experienced management team, and competitive expense ratio make it an attractive option for investors seeking mid-cap exposure. The AI-based rating considers the ETF's financial performance, market position, and future prospects. However, investors should be aware of the potential risks associated with market volatility and factor investing.

Resources and Disclaimers:

• Data sources: First Trust website, Morningstar, Yahoo Finance.
• Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult a financial professional before making any investment decisions.