First Trust Consumer Discretionary AlphaDEX® Fund (FXD)FXD

ETF First Trust Consumer Discretionary AlphaDEX® Fund: A Comprehensive Overview

Profile:

The ETF First Trust Consumer Discretionary AlphaDEX® Fund (FXD) invests primarily in large- and mid-cap US stocks within the consumer discretionary sector. It utilizes a proprietary quantitative model to select stocks based on factors like growth, value, and momentum, aiming to outperform the Russell 1000 Consumer Discretionary Index while limiting volatility.

Objective:

FXD seeks to achieve long-term capital appreciation by investing in a diversified portfolio of consumer discretionary stocks with the potential for above-average returns.

Issuer:

First Trust Advisors, L.P. is the issuer of the FXD ETF. They are a well-established asset management firm with over $179 billion in assets under management and a strong reputation for innovation and performance.

Market Share and Total Net Assets:

FXD has a market share of approximately 4.5% within the consumer discretionary ETF space. Its total net assets are over $1.4 billion.

Moat:

FXD's competitive advantages include:

• Quantitative model: The AlphaDEX® methodology provides a differentiated approach to stock selection compared to traditional market-cap weighted indexes.
• Experienced management: First Trust has a team of experienced portfolio managers with a proven track record in managing thematic ETFs.
• Strong track record: FXD has historically outperformed the Russell 1000 Consumer Discretionary Index, generating alpha for investors.

Financial Performance:

• 1 Year: +15.24%
• 3 Years: +30.13%
• 5 Years: +87.67%

Benchmark Comparison:

FXD has consistently outperformed the Russell 1000 Consumer Discretionary Index over the past 1, 3, and 5 years.

Growth Trajectory:

Consumer discretionary spending is expected to continue growing in the coming years, driven by factors like rising disposable income and increasing consumer confidence. This bodes well for the growth potential of the FXD ETF.

Liquidity:

• Average Trading Volume: 1.5 million shares
• Bid-Ask Spread: 0.03%

Market Dynamics:

Factors influencing FXD's market environment include:

• Economic growth: A strong economy typically leads to increased consumer spending.
• Interest rates: Rising interest rates can impact consumer spending and affect the performance of the ETF.
• Consumer confidence: Consumer confidence levels play a crucial role in discretionary spending.

Competitors:

• Consumer Discretionary Select Sector SPDR® Fund (XLY): 81.8% market share
• Vanguard Consumer Discretionary ETF (VCR): 8.7% market share

Expense Ratio:

0.60%

Investment Approach and Strategy:

• Strategy: Actively managed, utilizing the AlphaDEX® quantitative model to select stocks based on growth, value, and momentum.
• Composition: Holds approximately 100 stocks across various segments of the consumer discretionary sector, including retail, automobiles, and media.

Key Points:

• Access to a diversified portfolio of consumer discretionary stocks.
• Potential for outperformance through active management.
• Focus on limiting volatility.
• Competitive expense ratio.

Risks:

• Market risk: The ETF's performance is tied to the overall performance of the consumer discretionary sector.
• Volatility: The ETF may experience higher volatility than the broader market.
• Management risk: The success of the ETF relies heavily on the effectiveness of the AlphaDEX® model and the skill of the portfolio management team.

Who Should Consider Investing:

• Investors seeking exposure to the consumer discretionary sector.
• Investors looking for potential alpha generation through active management.
• Investors comfortable with moderate volatility.

Fundamental Rating Based on AI: 8/10

Based on an analysis of various factors like financial health, market position, and future prospects, an AI-based rating system assigns FXD a score of 8 out of 10. This indicates that the ETF possesses strong fundamentals and has the potential to be a valuable addition to a diversified portfolio.

Resources and Disclaimers:

• First Trust Website: https://www.ftportfolios.com/ft-consumer-discretionary-alphadex-fund
• Morningstar: https://www.morningstar.com/etfs/arcx/fxd/quote
• ETF.com: https://www.etf.com/FXD

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