First Trust Consumer Discretionary AlphaDEX® Fund (FXD)

Overview

The First Trust Consumer Discretionary AlphaDEXu00ae Fund (FXD) seeks investment results that correspond to the performance of the StrataQuantu00ae Consumer Discretionary Index. The fund uses an AlphaDEXu00ae stock selection methodology to identify and weight consumer discretionary stocks based on growth factors.

Reputation and Reliability

First Trust is a well-established ETF provider known for its innovative AlphaDEXu00ae methodology and a range of investment strategies.

Management Expertise

First Trust has a team of experienced portfolio managers and analysts specializing in quantitative investment strategies.

Goal

To provide investment results that correspond to the price and yield, before fees and expenses, of the StrataQuantu00ae Consumer Discretionary Index.

Investment Approach and Strategy

Strategy: The fund employs a 'quantamental' approach combining quantitative factors with fundamental analysis to select and weight stocks.

Composition The ETF primarily holds common stocks of U.S. consumer discretionary companies.

Market Share: FXD has a moderate market share within the consumer discretionary ETF sector.

Total Net Assets (AUM): 855100000

Key Competitors

• XLY
• VCR
• RCD

Competitive Landscape

The consumer discretionary ETF sector is highly competitive, dominated by larger, market-cap weighted funds like XLY and VCR. FXD's AlphaDEXu00ae strategy differentiates it, potentially offering different risk-adjusted returns, but it faces challenges in attracting assets against the more passively managed options.

Historical Performance: Historical performance varies with market conditions and the effectiveness of the AlphaDEXu00ae strategy.

Benchmark Comparison: Performance should be compared to the StrataQuantu00ae Consumer Discretionary Index and broad consumer discretionary benchmarks like XLY and VCR.

Expense Ratio: 0.63

Average Trading Volume

The ETF exhibits moderate liquidity with a healthy average trading volume.

Bid-Ask Spread

The bid-ask spread is typically reasonable, reflecting adequate liquidity for most investors.

Market Environment Factors

Consumer spending, economic growth, interest rates, and consumer confidence all influence FXD's performance.

Growth Trajectory

The growth trajectory is dependent on the continued strength of the consumer discretionary sector and the success of First Trust's AlphaDEXu00ae selection methodology; changes may occur in sector holdings and weighting based on algorithm outputs.

Competitive Edge

FXD's competitive edge lies in its AlphaDEXu00ae methodology, which aims to outperform traditional market-cap weighted indices by selecting stocks based on growth factors. This quantitative approach seeks to identify undervalued companies with strong growth potential. While this strategy may offer different return profiles, it comes with higher expenses than passive investing. It has the ability to rebalance periodically, potentially capturing gains and mitigating losses.

Volatility

FXD's volatility can be moderate to high, reflecting the sector's sensitivity to economic cycles and consumer sentiment.

Market Risk

Market risk includes general economic downturns, shifts in consumer preferences, and sector-specific challenges impacting consumer discretionary companies.

Ideal Investor Profile

FXD is suitable for investors seeking exposure to the consumer discretionary sector with a potentially higher growth tilt and willing to accept higher fees for active stock selection.

Market Risk

This ETF is suitable for investors with a moderate to high risk tolerance seeking potential outperformance in the consumer discretionary sector; appropriate for long-term investors.

First Trust Consumer Discretionary AlphaDEXu00ae Fund (FXD) offers a differentiated approach to investing in the consumer discretionary sector through its quantitative AlphaDEXu00ae methodology. The fund selects and weights stocks based on growth factors, aiming to outperform traditional market-cap weighted indices. It comes with a higher expense ratio than passively managed funds but offers the potential for enhanced returns. Investors should consider their risk tolerance, investment goals, and the potential for sector-specific volatility before investing. Market share is small relative to leading competitiors.

• XLY
• VCR
• RCD
• PSCD
• FDIS

Data Sources:

• First Trust Website
• ETF.com
• Bloomberg

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Market data is subject to change.