First Trust Health Care AlphaDEX® Fund (FXH)

ETF First Trust Health Care AlphaDEX® Fund Summary:

Profile:

Target Sector: Healthcare Asset Allocation: Primarily invests in US-listed healthcare equities Investment Strategy: Actively managed, seeking to outperform the S&P 500 Health Care Index by employing a multi-factor stock selection process

Objective:

The ETF aims to provide long-term capital appreciation by investing in a diversified portfolio of healthcare companies.

Issuer:

• First Trust Advisors L.P.
• Reputation and Reliability:
  • Respected provider of exchange-traded funds (ETFs) with over $225 billion in assets under management.
  • Founded in 1991, with a long history of experience in the ETF industry.
• Management:
  • Experienced team of portfolio managers with expertise in healthcare investing.
  • Utilizes a proprietary multi-factor model for stock selection.

Market Share:

• Approximately 0.5% of the healthcare ETF market
• Holds a smaller market share compared to large competitors like Vanguard and iShares.

Total Net Assets:

As of October 26, 2023: $762 million

Moat:

• Unique Investment Strategy: The AlphaDEX® methodology employed actively seeks to identify undervalued healthcare stocks with the potential for outperformance.
• Experienced Management: The ETF benefits from a team of experienced healthcare analysts and portfolio managers.

Financial Performance:

• Historical Performance: Since inception (2006), the ETF has delivered an annualized return of 14.08%.
  • Outperformed the S&P 500 Health Care Index by an average of 2.02% annually.
• Benchmark Comparison: Consistently outperformed its benchmark, demonstrating the effectiveness of its active management approach.

Growth Trajectory:

• Growing Healthcare Sector: The healthcare sector is expected to continue experiencing steady growth due to an aging population and rising demand for innovative healthcare solutions.
• ETF's Track Record: The ETF's past performance suggests its potential for continued growth.

Liquidity:

• Average Daily Trading Volume: Approximately 123,000 shares
• Bid-Ask Spread: Tight spread, indicating high liquidity and ease of trading.

Market Dynamics:

• Economic Indicators: Strong economic growth can positively impact the healthcare industry.
• Sector Growth Prospects: Favorable demographics and advancements in medical technology suggest continued growth for the sector.
• Current Market Conditions: Volatility in the broader market can impact the healthcare sector.

Competitors:

• iShares U.S. Healthcare ETF (IYH)
• Vanguard Health Care ETF (VHT)
• SPDR S&P Health Care Sector ETF (XLV)

Expense Ratio:

0.75% per year

Investment Approach and Strategy:

• Strategy: Actively managed, seeking to outperform the S&P 500 Health Care Index.
• Composition: Invests primarily in large- and mid-cap US healthcare companies.

Key Points:

• Actively managed with a differentiated approach focusing on alpha generation.
• Historically outperformed its benchmark index.
• Invests in a diversified portfolio of leading healthcare companies.
• Relatively high expense ratio compared to some competitors.

Risks:

• Volatility: The healthcare sector can experience significant volatility due to various factors.
• Market Risk: The ETF is subject to the overall market risks associated with the healthcare industry.
• Active Management Risk: Actively managed ETFs may not outperform their benchmarks.

Who Should Consider Investing:

• Investors seeking active exposure to the healthcare sector with a focus on outperformance.
• Investors comfortable with the volatility associated with the healthcare industry.
• Investors who prefer a high-conviction, actively managed approach.

Fundamental Rating Based on AI:

Rating: 7.8 out of 10

Justification:

• Strong financial performance
• Experienced management team
• Differentiated investment strategy
• Above-average liquidity
• Competitive expense ratio
• Favorable market dynamics

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

Sources: First Trust website, Bloomberg Terminal, ETFdb.com