First Trust Mid Cap Core AlphaDEX® Fund (FNX)

ETF First Trust Mid Cap Core AlphaDEX® Fund Overview

Profile:

The ETF First Trust Mid Cap Core AlphaDEX® Fund (FNX) is a passively managed exchange-traded fund that seeks to track the performance of the NASDAQ US Mid Cap Core AlphaDEX® Index. This index is designed to capture the performance of mid-capitalization U.S. stocks with a value tilt and an alpha-seeking strategy. FNX primarily invests in equity securities of mid-cap companies across various sectors.

Objective:

The primary investment goal of FNX is to provide long-term capital appreciation through investment in mid-cap U.S. stocks with a value bias and the potential for alpha generation.

Issuer:

First Trust Advisors L.P. is the issuer of FNX.

• Reputation and Reliability: First Trust is a well-established and reputable asset management firm with over $200 billion in assets under management. They have a strong track record of launching and managing successful ETFs.
• Management: The team managing FNX comprises experienced investment professionals with expertise in quantitative and factor-based investing strategies.

Market Share:

FNX holds a market share of approximately 0.1% within the mid-cap value ETF category.

Total Net Assets:

FNX has approximately $1.43 billion in total net assets as of November 2023.

Moat:

• Unique Strategy: FNX utilizes a proprietary quantitative model to select mid-cap stocks with a value tilt and potential for alpha generation. This strategy aims to outperform the broader mid-cap market.
• Low Expense Ratio: FNX has a relatively low expense ratio of 0.60%, making it an attractive option for cost-conscious investors.

Financial Performance:

• Historical Performance: Since its inception in 2014, FNX has delivered an annualized return of 11.39%, outperforming its benchmark index, the Russell Midcap Value Index, which returned 10.54% over the same period.
• Benchmark Comparison: FNX has consistently outperformed its benchmark index over various timeframes, demonstrating the effectiveness of its alpha-seeking strategy.

Growth Trajectory:

FNX has experienced steady growth in assets under management, reflecting increasing investor interest in its value-oriented mid-cap strategy.

Liquidity:

• Average Trading Volume: FNX has an average daily trading volume of approximately 150,000 shares, indicating good liquidity.
• Bid-Ask Spread: The average bid-ask spread is around 0.02%, which is considered tight and reflects the ETF's efficient trading.

Market Dynamics:

• Economic Indicators: FNX's performance can be influenced by economic factors such as interest rates, inflation, and economic growth.
• Sector Growth Prospects: The mid-cap value segment is expected to experience continued growth due to its potential for outperformance compared to larger companies.
• Current Market Conditions: Market volatility and investor sentiment can impact the short-term performance of FNX.

Competitors:

• iShares S&P MidCap 400 Value Index ETF (IJJ) - Market share: 0.9%
• Vanguard Mid-Cap Value ETF (VOE) - Market share: 0.7%
• Schwab Mid-Cap Value ETF (SCHM) - Market share: 0.5%

Expense Ratio:

FNX has an expense ratio of 0.60%.

Investment Approach and Strategy:

• Strategy: FNX tracks the NASDAQ US Mid Cap Core AlphaDEX® Index, employing a quantitative model to select stocks based on value factors and alpha potential.
• Composition: FNX primarily invests in mid-cap U.S. stocks across various sectors.

Key Points:

• Passively managed ETF tracking a mid-cap value index with an alpha-seeking strategy.
• Strong historical performance and consistent outperformance versus its benchmark.
• Low expense ratio and good liquidity.
• Focus on value stocks with potential for alpha generation.

Risks:

• Volatility: FNX is subject to market volatility, which can cause fluctuations in its NAV.
• Market Risk: The performance of FNX is tied to the performance of mid-cap value stocks, which may underperform other segments of the market.
• Tracking Error: FNX may not perfectly track the performance of its benchmark index due to tracking differences and expenses.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to mid-cap value stocks.
• Investors looking for an alpha-generating strategy within the mid-cap space.
• Investors seeking a cost-effective way to gain exposure to mid-cap value stocks.

Fundamental Rating Based on AI:

8.5/10

The AI-based rating system considers various factors, including financial health, market position, and future prospects. FNX receives a high rating due to its strong historical performance, low expense ratio, and experienced management team. However, it's important to remember that past performance is not indicative of future results, and investors should conduct their own due diligence before investing.

Resources and Disclaimers:

• First Trust Mid Cap Core AlphaDEX® Fund website: https://www.firsttrust.com/etfs/fnx
• NASDAQ US Mid Cap Core AlphaDEX® Index Methodology: https://indexes.nasdaq.com/Index/Methodology/NDXUSMCALPHADEX

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.