First Trust Mid Cap Growth AlphaDEX® Fund (FNY)

Overview of ETF First Trust Mid Cap Growth AlphaDEX® Fund (FNX)

Profile

The First Trust Mid Cap Growth AlphaDEX® Fund (FNX) is an actively managed ETF that invests in mid-sized companies with strong growth potential. The fund selects stocks based on a proprietary quantitative model called the AlphaDEX®, which focuses on identifying companies with a combination of value, quality, and momentum characteristics. FNX has approximately 350 holdings across a variety of sectors, with the largest being information technology, healthcare, and financials.

Objective

FNX's primary goal is to achieve long-term capital appreciation by investing in a diversified portfolio of high-quality mid-cap growth stocks.

Issuer: First Trust

First Trust is a US-based global asset management firm with over $241 billion in assets under management as of June 30th, 2023. The company offers a wide range of investment products, including ETFs, mutual funds, and separately managed accounts. First Trust has a strong reputation and track record, with several of its ETFs receiving top ratings from independent research firms.

Market Share:

FNX is a relatively small ETF within the mid-cap growth category, with a market share of approximately 1.5%. However, its assets under management have been increasing steadily in recent years.

Total Net Assets:

FNX has $3.44 billion in total net assets as of November 10th, 2023, demonstrating investor confidence and continued growth.

Moat

The ETF's main competitive advantage is its unique AlphaDEX® investment model. This model has a strong track record of outperforming traditional benchmark indices. Additionally, FNX benefits from First Trust's experience and expertise in managing actively managed ETFs.

Financial Performance:

• Historical data shows FNX outperforming the S&P MidCap 400 Growth Index by an average of 1.2% annually since inception.

• In 2023, FNX returned 12.2%, compared to the index's 8.7% return.

Growth Trajectory:

• The mid-cap growth segment has historically outperformed other segments of the stock market over the long term.

• Continued market growth and increasing adoption of the AlphaDEX model suggest a positive growth trajectory for FNX.

Liquidity:

• FNX has an average daily trading volume of over 500,000 shares, ensuring easy buying and selling without impacting price.

• The average bid-ask spread is tight at 0.02%, indicating low transaction costs.

Market dynamics:

• Economic indicators: Strong economic growth can benefit mid-cap companies and drive the fund's performance.

• Interest rate changes: Rising interest rate environments can negatively impact growth stocks.

• Sector performance: The performance of sectors within FNX, like technology and healthcare, can significantly affect its overall returns.

Competitors:

• iShares Russell Mid-Cap Growth ETF (IWP) 44% market share.
• Vanguard Mid-Cap Growth ETF(VOT) 29% market share
• SPDR S&P MidCap 400 Growth ETF(MGK) 17.7% market share.

** Expense Ratio:**

• FNX's expense ratio is 0.6%, which is considered average for actively managed mid-cap growth ETFs.

Investment Approach:

• FNX utilizes an active management strategy with a quantitative model to select stocks with strong growth potential, value, momentum, and quality.

• It invests primarily in common stocks of mid-sized companies with a market capitalization between $2 billion and $10 billion and exhibits strong growth characteristics.

Key Points

• Actively managed mid-cap growth ETF with strong performance history.
• Unique AlphaDEX model aims to outperform traditional benchmarks.
• Good liquidity and a competitive expense ratio.

Risks

• Higher volatility than the broader market due to its focus on growth stocks.
• Market risk associated with mid-cap companies and specific sector exposure.

Who Should Invest?

• Investors seeking long-term capital appreciation through mid-cap company growth potential.
• Investors comfortable with the higher volatility associated with actively managed growth strategies.

Fundamental Rating Based on AI

7 out of 10:

FNX has a strong fundamental profile with a good track record of outperformance, a solid investment model, experienced management, and reasonable fees. However, its smaller market share and higher volatility compared to competitors are factors to consider.

Resources:

• First Trust Mid Cap Growth AlphaDEX Fund: https://global.firsttrust.com/etf-resources/fund/fnx
• ETF Database - FNX : https://etfdb.com/etf/FNX/
• Morningstar FNX Report - First Trust Mid Cap AlphaDEX Fund: https://www.morningstar.com/etfs/arcx/fnx

Disclaimers:

This information is for general educational purposes only and should not be considered investment advice. Please consult with a professional advisor before investing in any specific security.