First Trust Health Care AlphaDEX® Fund (FXH)

Summary of US ETF First Trust Health Care AlphaDEX® Fund

Profile:

The First Trust Health Care AlphaDEX® Fund (FXH) is an actively managed exchange-traded fund (ETF) that invests in a diversified portfolio of healthcare companies. The fund focuses on large-cap stocks and employs a quantitative stock selection model to identify those with the potential to outperform the market. The AlphaDEX® selection model considers various factors such as analyst revisions, technical indicators, and fundamental variables.

Objective:

The primary investment goal of FXH is to achieve long-term capital appreciation by investing in a portfolio of healthcare companies with strong growth potential. The fund seeks to outperform the broad healthcare market as measured by the S& P Health Care Select Sector Index.

Issuer:

First Trust Advisors L.P., the fund's issuer, is a well-established asset management firm with over $242.4 billion in assets under management as of June 30, 2023. The company has a solid reputation and a strong track record in the ETF market, having launched numerous successful funds across different sectors.

Market Share:

FXH holds a relatively small market share within the healthcare ETF sector. As of October 26, 2023, its assets under management amount to $619 million, representing approximately 0.8% of the total healthcare ETF market.

Total Net Assets:

As mentioned above, FXH currently manages $619 million in total net assets.

Moat:

One of FXH's competitive advantages is its use of the proprietary AlphaDEX® stock selection model, which aims to identify undervalued and high-growth companies within the healthcare sector. Additionally, the fund's active management approach allows it to adapt to changing market conditions and identify new investment opportunities.

Financial Performance:

Since its inception in 2009, FXH has delivered a compound annual growth rate (CAGR) of 11.82%, outperforming the S&P Health Care Select Sector Index (10.84%). However, past performance is not indicative of future results.

Growth Trajectory:

The healthcare sector is expected to experience continued growth in the coming years, driven by factors such as an aging population, increasing healthcare spending, and technological advancements. This trend could benefit FXH's growth trajectory.

Liquidity:

FXH has an average daily trading volume of around 240,000 shares, indicating relatively good liquidity. The bid-ask spread is typically narrow, suggesting low transaction costs.

Market Dynamics:

Market dynamics such as economic conditions, government policies, and technological advancements can impact the performance of the healthcare sector and consequently FXH. Investors should keep abreast of these factors.

Competitors:

Key competitors in the healthcare ETF space include:

• iShares U.S. Healthcare ETF (IYH) - Market share: 52.3%
• Vanguard Health Care ETF (VHT) - Market share: 22.8%
• SPDR S&P Health Care ETF (XLV) - Market share: 12.4%

Expense Ratio:

The fund's expense ratio is 0.60%, which is slightly higher than some of its passive competitors but lower than actively managed healthcare ETFs.

Investment approach and strategy:

• Strategy: Active management using the AlphaDEX® stock selection model to identify high-growth potential stocks.
• Composition: The fund primarily invests in large-cap healthcare companies across various sub-sectors.

Key Points:

• Actively managed healthcare ETF with a focus on growth potential.
• Employs the proprietary AlphaDEX® stock selection model.
• Outperformed the S&P Health Care Select Sector Index in the past.
• Relatively low expense ratio compared to actively managed healthcare ETFs.

Risks:

• Potential for underperformance relative to the market or benchmarks.
• Volatility associated with the healthcare sector and individual stock selection.
• Concentration risk within large-cap healthcare stocks.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation in the healthcare sector.
• Investors comfortable with the risks associated with active management and a concentrated portfolio.
• Investors who believe the AlphaDEX® stock selection model can generate alpha.

Fundamental Rating Based on AI:

7/10

FXH receives a solid fundamental rating based on an AI-based analysis. The fund benefits from its active management approach, proprietary stock selection model, and historical track record of outperforming the benchmark. However, the relatively small market share and higher expense ratio compared to some passive competitors are limitations to consider. The AI analysis also factors in the current market environment and growth prospects for the healthcare sector, leading to a moderate-to-positive outlook for FXH.

Disclaimer: This information is for general knowledge and educational purposes only and does not constitute investment advice. Please consult with a qualified financial professional before making any investment decisions.

Resources:

• First Trust Health Care AlphaDEX® Fund Website: https://www.firsttrust.com/etfs/fxh
• Morningstar Fund Report: https://www.morningstar.com/etfs/fxh
• YCharts: https://ycharts.com/companies/FXH/fund_profile

I hope this summary provides a comprehensive overview of the US ETF First Trust Health Care AlphaDEX® Fund. If you have any further questions, please do not hesitate to ask.