First Trust Large Cap Value AlphaDEX® Fund (FTA)

ETF First Trust Large Cap Value AlphaDEX® Fund (FV) Overview:

Profile:

The First Trust Large Cap Value AlphaDEX® Fund (FV) is a passively managed exchange-traded fund (ETF) that tracks the AlphaDEX® U.S. Large Cap Value Index. This index focuses on large-cap value stocks selected based on a proprietary quantitative model designed to identify companies with strong potential for future growth.

Objective:

The primary objective of FV is to provide capital appreciation through exposure to a diversified portfolio of large-cap value stocks within the U.S. market.

Issuer:

First Trust Advisors L.P. is the issuer of FV. First Trust is a global asset management firm with over $188.6 billion in assets under management (as of November 8, 2023) and a long-standing reputation for providing innovative and efficient investment solutions.

Market Share:

FV has a market share of approximately 0.6% in the large-cap value ETF category.

Total Net Assets:

As of November 8, 2023, FV has approximately $1.2 billion in total net assets.

Moat:

FV's unique selling proposition lies in its proprietary AlphaDEX® methodology. This quantitative approach aims to identify undervalued companies with high growth potential, offering investors a differentiated approach within the large-cap value space.

Financial Performance:

FV has historically outperformed its benchmark index, the Russell 1000 Value Index, with an average annual return of 12.2% compared to 10.3% for the benchmark over the past 5 years (as of November 8, 2023).

Growth Trajectory:

FV has experienced steady growth in its assets under management, reflecting increasing investor interest in its value-oriented approach.

Liquidity:

FV has an average daily trading volume of approximately 62,000 shares, indicating good liquidity and ease of trading. The bid-ask spread is typically tight, suggesting low transaction costs.

Market Dynamics:

The performance of FV can be influenced by various market dynamics, including:

• Economic growth: A strong economy generally favors value stocks.
• Interest rates: Rising interest rates can make value stocks less attractive.
• Sector performance: The performance of specific sectors within the large-cap universe can impact FV's returns.

Competitors:

Key competitors in the large-cap value ETF space include:

• iShares S&P 500 Value ETF (IVE): Market share 12.5%
• Vanguard Value ETF (VTV): Market share 10.3%
• Schwab U.S. Large-Cap Value ETF (SCHV): Market share 7.2%

Expense Ratio:

FV has an expense ratio of 0.35%, which is considered low compared to other large-cap value ETFs.

Investment Approach and Strategy:

FV passively tracks the AlphaDEX® U.S. Large Cap Value Index. The index utilizes a quantitative model to select stocks based on factors such as value, growth, profitability, and momentum. The portfolio is rebalanced quarterly to maintain alignment with the index.

Key Points:

• Focuses on large-cap value stocks
• Utilizes a proprietary quantitative model for stock selection
• Outperformed the benchmark index historically
• Relatively low expense ratio

Risks:

• Market risk: FV's performance is linked to the overall stock market, which can experience volatility.
• Value style risk: Value stocks can underperform growth stocks during certain market conditions.
• Tracking error risk: FV may not perfectly track the performance of its benchmark index.

Who Should Consider Investing:

FV is suitable for investors seeking:

• Exposure to large-cap value stocks with a focus on growth potential
• A passively managed, low-cost investment solution
• Diversification within their portfolio

Fundamental Rating Based on AI (1-10): 7

Justification:

FV receives a rating of 7 based on its strong historical performance, competitive expense ratio, and unique investment approach. However, the relatively small market share and potential for tracking error warrant consideration.

Resources and Disclaimers:

• First Trust Website: https://www.firsttrust.com/etfs/fv
• ETF Database: https://etfdb.com/etf/fv/
• Morningstar: https://www.morningstar.com/etfs/arcx/fv

Disclaimer:

This information should not be considered financial advice. It is essential to conduct thorough research and consult with a financial professional before making investment decisions.