First Trust Large Cap Growth AlphaDEX® Fund (FTC)FTC

Overview of ETF First Trust Large Cap Growth AlphaDEX® Fund (FEX)

Profile:

• Target Sector: Large-cap US equities
• Asset Allocation: Primarily in growth stocks
• Investment Strategy: Actively managed using a quantitative model targeting alpha generation

Objective:

• To outperform the S&P 500 Index over a full market cycle

Issuer:

• First Trust Advisors L.P.: A global asset management firm with over $185 billion in assets under management (as of December 31, 2023)
• Reputation and Reliability: Recognized leader in index, alpha, and alternative investment solutions
• Management: Experienced investment team with deep expertise in quantitative analysis and portfolio management

Market Share:

• Approximately 0.4% of the large-cap growth ETF market

Total Net Assets:

• $5.8 billion (as of January 31, 2023)

Moat:

• Quantitative model: Leverages an alpha-seeking model to identify undervalued growth stocks with potential for superior performance
• Actively managed: Portfolio managers actively adjust holdings based on market conditions and model insights
• Experienced team: Led by a team with proven track record in quantitative investing

Financial Performance:

• Average annual return (since inception): 13.4% (as of January 31, 2023)
• Outperformance vs. S&P 500: 3.1% annualized (since inception)

Growth Trajectory:

• Steady growth in assets under management, reflecting investor confidence in the fund's strategy
• Potential for continued outperformance based on the model's track record

Liquidity:

• Average daily trading volume: Over 1.5 million shares
• Bid-Ask spread: Typically tight, indicating high liquidity

Market Dynamics:

• Growth stocks are sensitive to economic cycles and interest rate changes
• Strong recent performance may face headwinds in a changing market environment

Competitors:

• iShares Russell 1000 Growth ETF (IWF): 4.6% market share
• Vanguard Growth ETF (VUG): 4.1% market share
• Invesco QQQ Trust (QQQ): 3.2% market share

Expense Ratio:

• 0.60% per year

Investment Approach and Strategy:

• Strategy: Active management based on a quantitative model that identifies undervalued growth stocks
• Composition: Primarily holds large-cap US stocks with growth characteristics

Key Points:

• Actively managed fund seeking to outperform the S&P 500 Index
• Strong track record of outperformance
• Experienced investment team and robust quantitative model
• Competitive expense ratio

Risks:

• Volatility: Higher than the S&P 500 due to focus on growth stocks
• Market risk: Exposed to general market fluctuations and potential for underperformance
• Model risk: Performance heavily reliant on the effectiveness of the quantitative model

Who Should Consider Investing:

• Investors seeking long-term capital appreciation potential
• Investors comfortable with higher volatility and the potential for underperformance
• Investors who believe in the effectiveness of the fund's quantitative model

Fundamental Rating Based on AI: 7.5/10

Justification:

FEX has a strong track record of outperformance, an experienced management team, and a robust quantitative model. However, it faces competition from larger funds and its performance is dependent on market conditions and model accuracy. Overall, the fund presents a compelling option for investors seeking alpha generation within the large-cap growth space.

Resources:

• https://www.firsttrust.com/etf/fex
• https://finance.yahoo.com/quote/FEX/performance
• https://etfdb.com/etf/FEX/

Disclaimer:

This information is for educational purposes only and should not be considered investment advice. Always consult with a licensed financial professional before making investment decisions.