First Trust Mid Cap Core AlphaDEX® Fund (FNX)

Overview

The First Trust Mid Cap Core AlphaDEXu00ae Fund (FNX) is an actively managed ETF that seeks to track the performance of its underlying index, the Nasdaq US Mid Cap Core AlphaDEXu00ae Index. It focuses on mid-capitalization US equities, employing a proprietary AlphaDEXu00ae methodology to select stocks based on quantitative ranking factors such as growth and value. The fund aims to outperform traditional market-cap-weighted indices by identifying companies with strong fundamental characteristics.

Reputation and Reliability

First Trust is a well-established and reputable issuer of ETFs with a diverse range of products. They have a track record of innovation and providing investment solutions to a broad spectrum of investors.

Management Expertise

First Trust employs experienced investment professionals who oversee the ETF's strategy and the proprietary AlphaDEXu00ae methodology. This methodology is designed to systematically identify and select stocks with potential for outperformance.

Goal

To provide capital appreciation by investing in a portfolio of mid-capitalization US equities that are identified by the Nasdaq US Mid Cap Core AlphaDEXu00ae Index as having strong growth and value characteristics.

Investment Approach and Strategy

Strategy: The ETF aims to provide performance that is similar to its underlying index, the Nasdaq US Mid Cap Core AlphaDEXu00ae Index. This index uses a proprietary quantitative methodology to select constituents.

Composition The ETF primarily holds US mid-capitalization stocks. The selection of these stocks is based on quantitative factors that aim to identify companies with strong growth and value attributes.

Market Share: Precise, up-to-the-minute market share data for individual ETFs is highly dynamic and often proprietary. However, as a mid-cap focused ETF, FNX operates within a competitive segment of the ETF market.

Total Net Assets (AUM): 1000000000

Key Competitors

• Vanguard Mid-Cap ETF (VO)
• iShares Core S&P Mid-Cap ETF (IJH)
• SPDR Portfolio S&P 400 Mid Cap ETF (SPMD)

Competitive Landscape

The mid-cap ETF space is highly competitive, with several large, well-established ETFs from major providers. FNX's primary advantage lies in its AlphaDEXu00ae methodology, which offers a quantitative, factor-based approach that differs from traditional market-cap-weighted indices. However, its smaller AUM compared to some competitors can sometimes lead to lower liquidity and potentially wider bid-ask spreads. The main disadvantage is the active management aspect, which can result in higher fees compared to purely passive ETFs.

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Benchmark Comparison: The ETF aims to outperform its benchmark, the Nasdaq US Mid Cap Core AlphaDEXu00ae Index. While performance varies over time, the AlphaDEXu00ae methodology is designed to achieve this outperformance through its stock selection process. Detailed comparative performance figures against the benchmark are available from the ETF provider.

Expense Ratio: 0.65

Average Trading Volume

The ETF generally exhibits moderate average trading volume, which is typical for many mid-cap ETFs.

Bid-Ask Spread

The bid-ask spread for FNX can vary but is generally considered competitive, though potentially wider than the most liquid large-cap ETFs.

Market Environment Factors

Mid-cap stocks are sensitive to economic growth prospects, interest rate movements, and overall market sentiment. Sector performance within the mid-cap space, such as technology, healthcare, and industrials, significantly influences the ETF's performance. Current market conditions, including inflation and geopolitical events, can also impact the underlying holdings.

Growth Trajectory

The growth of mid-cap companies is generally expected to be higher than large-caps but with more volatility. The AlphaDEXu00ae methodology aims to capitalize on this growth by identifying companies with strong fundamentals. Changes in strategy and holdings are driven by the quantitative model, which is rebalanced periodically.

Competitive Edge

The ETF's primary competitive edge lies in its proprietary AlphaDEXu00ae methodology. This quantitative approach systematically identifies mid-cap companies with favorable growth and value characteristics, aiming to provide exposure to potentially outperforming stocks. This systematic, rules-based selection process can offer a distinct advantage over traditional passive index tracking. The active management allows for adjustments based on the quantitative model's signals, potentially leading to better risk-adjusted returns.

Volatility

As a mid-cap equity ETF, FNX is expected to exhibit moderate to high historical volatility, reflecting the inherent risks of investing in companies of this size.

Market Risk

The ETF is exposed to market risk, which is the risk that the value of its underlying securities will decline due to factors affecting the overall stock market. It is also subject to specific risks related to the mid-cap segment, including potential for greater price swings compared to large-cap stocks, and sector-specific risks within its portfolio.

Ideal Investor Profile

The ideal investor for FNX is one seeking exposure to US mid-capitalization equities with a strategy that aims for outperformance through quantitative stock selection. Investors should have a moderate to high risk tolerance and a long-term investment horizon.

Market Risk

This ETF is best suited for long-term investors who are looking to diversify their portfolios with mid-cap exposure and believe in the efficacy of a quantitative, factor-based investment approach. It is less suitable for short-term traders or those seeking extremely low-cost index replication.

The First Trust Mid Cap Core AlphaDEXu00ae Fund (FNX) is an actively managed ETF focusing on US mid-cap stocks, employing a proprietary AlphaDEXu00ae methodology to identify growth and value opportunities. Its goal is capital appreciation by outperforming traditional indices. While facing competition, its unique quantitative strategy offers a potential advantage. Investors should be aware of the moderate to high volatility associated with mid-cap equities and the associated market risks.

Data Sources:

• First Trust Investments website
• Nasdaq Index data
• Financial data aggregators

Disclaimers:

This information is for illustrative purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investors should conduct their own research and consult with a financial advisor before making investment decisions.