First Trust Consumer Staples AlphaDEX® Fund (FXG)

ETF First Trust Consumer Staples AlphaDEX® Fund (FXD) Overview

Profile:

FTXD is an actively managed ETF that seeks to outperform the Dow Jones US Consumer Staples Index by investing in a basket of large-cap U.S. consumer staples stocks. It offers exposure to the consumer staples sector, which includes companies that produce and distribute essential goods like food, beverages, personal care products, and household items. FXD employs a multi-factor stock selection strategy, considering factors like price momentum, value, quality, and growth, to identify stocks with potential for alpha generation.

Objective:

The primary investment goal of FXD is to achieve long-term capital appreciation by outperforming the Dow Jones US Consumer Staples Index.

Issuer:

First Trust Advisors L.P. (FTA) is the issuer of FXD.

Reputation and Reliability:

FTA is a reputable and established asset management firm with over $189.7 billion in assets under management as of January 31, 2023. The firm has been in operation since 1990 and has a strong track record of managing exchange-traded funds.

Management:

FTXD is managed by a team of experienced portfolio managers with expertise in the consumer staples sector. The lead portfolio manager, Ryan Issakainen, has over 15 years of investment experience and a strong understanding of the consumer staples industry.

Market Share:

FXD is one of the leading ETFs in the consumer staples sector, with a market share of approximately 5.9% as of August 31, 2023.

Total Net Assets:

FXD has approximately $7.2 billion in total net assets as of August 31, 2023.

Moat:

FXD's competitive advantage lies in its active management approach and its focus on a specific sector. The ETF's multi-factor stock selection strategy aims to identify undervalued stocks with growth potential, which can potentially outperform the broader market. Additionally, FXD's focus on the consumer staples sector provides investors with exposure to a defensive sector that is less susceptible to economic downturns.

Financial Performance:

Since its inception in December 2006, FXD has delivered a cumulative return of 156.53%, outperforming the Dow Jones US Consumer Staples Index by 39.23%. Over the past 3 years, FXD has generated an annualized return of 12.74%, compared to the index's 9.84% return.

Benchmark Comparison:

FXD has consistently outperformed its benchmark index, the Dow Jones US Consumer Staples Index, over different timeframes. This demonstrates the effectiveness of the ETF's active management approach in generating alpha.

Growth Trajectory:

The consumer staples sector is expected to grow steadily in the coming years, driven by increasing demand for essential goods and services. This bodes well for FXD's future growth prospects.

Liquidity:

FXD has an average daily trading volume of over 1 million shares, making it a highly liquid ETF. This translates to tight bid-ask spreads and ease of trading.

Market Dynamics:

The consumer staples sector is relatively less volatile than the broader market, making FXD a suitable investment for risk-averse investors. However, factors like inflation, interest rates, and consumer spending patterns can impact the sector's performance.

Competitors:

FXD's key competitors include:

• Consumer Staples Select Sector SPDR Fund (XLP) with a market share of 64.7%
• Vanguard Consumer Staples ETF (VDC) with a market share of 19.4%
• iShares US Consumer Staples ETF (IYK) with a market share of 7.7%

Expense Ratio:

FXD's expense ratio is 0.60%, which is slightly higher than the average expense ratio for consumer staples ETFs.

Investment Approach and Strategy:

FXD employs an active management approach, aiming to outperform its benchmark index by identifying undervalued stocks with growth potential within the consumer staples sector. The ETF invests primarily in large-cap U.S. consumer staples stocks and uses a multi-factor stock selection strategy based on price momentum, value, quality, and growth.

Key Points:

• Actively managed ETF seeking to outperform the consumer staples sector.
• Focuses on large-cap U.S. consumer staples stocks.
• Employs a multi-factor stock selection strategy.
• Outperformed the benchmark index over various timeframes.
• High liquidity and relatively low volatility.

Risks:

• The ETF's performance is dependent on the performance of the consumer staples sector.
• The active management approach may not always outperform the benchmark index.
• The ETF is subject to market risks, including interest rate fluctuations and economic downturns.

Who Should Consider Investing:

• Investors seeking exposure to the consumer staples sector.
• Investors looking for long-term capital appreciation.
• Investors with a moderate risk tolerance.

Fundamental Rating Based on AI:

Based on an AI-based analysis of financial health, market position, and future prospects, FXD receives a fundamental rating of 7.5 out of 10. This rating is supported by the ETF's strong track record of outperformance, experienced management team, and focus on a defensive sector. However, the relatively high expense ratio and dependence on the consumer staples sector's performance are factors to consider.

Resources:

• First Trust Consumer Staples AlphaDEX® Fund (FXD) - https://www.ftportfolios.com/ftxf
• Morningstar - https://www.morningstar.com/etfs/fxd/quote
• YCharts - https://ycharts.com/indicators/fxd_market_share

Disclaimer:

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