First Trust Technology AlphaDEX® Fund (FXL)

Overview

The First Trust Technology AlphaDEXu00ae Fund (FXL) seeks investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the StrataQuantu00ae Technology Index. This fund focuses on U.S. technology companies and uses an enhanced indexing strategy.

Reputation and Reliability

First Trust is a well-established ETF provider known for its innovative and thematic ETF offerings.

Management Expertise

First Trust has a dedicated team of portfolio managers and analysts with experience in managing index-based and factor-based strategies.

Goal

The fund seeks to provide investment results that correspond generally to the price and yield of the StrataQuantu00ae Technology Index.

Investment Approach and Strategy

Strategy: The fund employs a quantitative methodology, known as the AlphaDEXu00ae methodology, to select and weight securities within the technology sector. This is not a pure market cap weighted approach.

Composition The fund holds a portfolio of U.S. technology stocks selected based on growth factors, value factors, and price momentum.

Market Share: FXL's market share within the broad technology ETF category is relatively small compared to more established, market-cap-weighted ETFs.

Total Net Assets (AUM): 1800000000

Key Competitors

• Technology Select Sector SPDRu00ae Fund (XLK)
• Invesco QQQ Trust (QQQ)
• Vanguard Information Technology ETF (VGT)

Competitive Landscape

The competitive landscape is dominated by large, market-cap-weighted ETFs like XLK and QQQ. FXL differentiates itself through its AlphaDEXu00ae methodology, aiming for potentially higher returns than passive indexing, but this also introduces more complexity and active management risk. Its smaller size means lower liquidity than its bigger competitors. Its expense ratio is also comparatively higher, making it less attractive to cost-conscious investors.

Historical Performance: Historical performance can be found in many online sources, and varies dependent upon the period reviewed. Users should conduct their own research.

Benchmark Comparison: The ETF's performance is benchmarked against the StrataQuantu00ae Technology Index. Comparison against a broad-market technology index such as XLK provides useful perspective.

Expense Ratio: 0.063

Average Trading Volume

FXL's average trading volume is moderate, indicating reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread for FXL is typically small, reflecting relatively good liquidity and efficient trading.

Market Environment Factors

Economic growth, interest rate changes, technological innovation, and regulatory developments can all influence the performance of FXL.

Growth Trajectory

The ETF's growth depends on its ability to attract assets and generate returns through its AlphaDEXu00ae strategy; changes in holdings reflect adjustments to that strategy.

Competitive Edge

FXL's competitive edge lies in its unique AlphaDEXu00ae methodology, which aims to identify and overweight stocks with attractive growth and value characteristics. This differentiated approach can potentially lead to outperformance compared to traditional market-cap-weighted ETFs. It is most beneficial for investors seeking an actively-managed approach within the passive ETF space. However, that unique approach relies on an unproven methodology.

Volatility

The ETF's volatility is generally similar to that of the broader technology sector; it can be prone to large swings.

Market Risk

Specific market risks include the potential for technology sector downturns, competition among tech companies, and regulatory scrutiny.

Ideal Investor Profile

The ideal investor is one who seeks technology sector exposure with a potentially higher return profile than passive ETFs and is comfortable with higher fees and the risks associated with an actively managed fund.

Market Risk

FXL may be suitable for long-term investors seeking targeted technology sector exposure and are willing to accept potentially higher volatility. It is less suitable for passive index followers focused on minimizing costs.

The First Trust Technology AlphaDEXu00ae Fund (FXL) offers a differentiated approach to technology sector investing through its AlphaDEXu00ae methodology, which focuses on stock selection based on growth and value factors. Its higher expense ratio and smaller size compared to its competitors may be a drawback. The fund is most appropriate for investors seeking a potentially higher-return technology ETF and who are comfortable with its active approach and related risks. However investors should still evaluate how much and how often, because it is best used for long-term investing.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar
• Bloomberg

Disclaimers:

The information provided is for informational purposes only and should not be considered investment advice. Market data is subject to change. Consult a financial professional before making any investment decisions.