First Trust Technology AlphaDEX® Fund (FXL)

ETF First Trust Technology AlphaDEX® Fund Overview

Profile:

The First Trust Technology AlphaDEX® Fund (Nasdaq: FTEC) is an actively managed exchange-traded fund (ETF) that invests in U.S.-listed technology companies. The fund tracks the AlphaDEX® Technology Index, which is based on a proprietary selection process designed to identify companies with high potential for growth and innovation. FTEC has a high concentration in the technology sector, particularly software and semiconductors.

Objective:

The fund's primary investment goal is to outperform the S&P 500 Index by investing in a portfolio of technology companies with strong long-term growth potential.

Issuer:

First Trust Advisors L.P., the issuer of FTEC, was established in 1991 and is known for its diverse range of actively managed ETFs. The firm manages over $245 billion in assets under management and boasts a strong reputation for innovation and customer service.

Market Share:

FTEC holds a market share of 0.48% of the Technology ETFs sector as of October 26, 2023. This places it among the top 20 technology-focused ETFs.

Total Net Assets:

As of October 26, 2023, the fund's total net assets stand at approximately $4.84 billion.

Moat:

FTEC's competitive advantages include:

• Active Management: Its actively managed approach allows for flexibility in selecting high-growth potential companies not included in traditional market-cap weighted indices.
• Experienced Management Team: The ETF is managed by First Trust's experienced team with deep expertise in the technology sector.
• Strong Track Record: FTEC has outperformed the S&P 500 on a risk-adjusted basis since its inception in 2015.

Financial Performance:

Since its inception, FTEC has delivered a cumulative return of 93.43%, outperforming the S&P 500's 74.39%. Its annualized return stands at 9.70%.

Growth Trajectory:

The technology sector is expected to grow steadily in the coming years, driven by advancements in artificial intelligence, cloud computing, and other emerging technologies. This could provide a favorable environment for FTEC's future performance.

Liquidity:

• Average Trading Volume: FTEC's average daily trading volume is over 600,000 shares, indicating relatively high liquidity.
• Bid-Ask Spread: The bid-ask spread is tight, typically around $0.04-$0.05, reflecting its efficient trading.

Market Dynamics:

Economic growth, interest rate fluctuations, and technological innovation significantly impact FTEC's market environment. Positive economic developments and rising demand for technology solutions can boost the sector's performance.

Competitors:

Key competitors in the technology ETF space include:

• iShares Expanded Tech Sector ETF (IGV): Market share - 3.85%
• Technology Select Sector SPDR Fund (XLK): Market share - 3.43%
• Invesco QQQ Trust (QQQ): Market share - 2.74%

Expense Ratio:

FTEC charges an expense ratio of 0.60%, which is considered to be in line with comparable actively managed technology ETFs.

Investment Approach and Strategy:

• Strategy: FTEC actively invests in high-growth technology companies through the AlphaDEX® Technology Index. This index selects stocks based on factors like innovation, market leadership, and financial metrics.
• Composition: The fund invests primarily in U.S.-listed tech stocks, with the majority concentrated in the software and semiconductor industries.

Key Points:

• Actively managed technology-focused ETF
• Strong long-term growth potential
• Outperformed S&P 500 since inception
• High liquidity, competitive expense ratio
• Suitable for investors seeking technology exposure

Risks:

• High volatility: Technology stocks are known for their inherent volatility, leading to potential fluctuations in the fund's value.
• Market risk: FTEC's performance is closely tied to the technology sector's health, making it susceptible to factors affecting the industry.

Who Should Consider Investing:

Investors seeking long-term capital appreciation with high risk tolerance and interest in the technology sector may find FTEC an attractive option.

Fundamental Rating Based on AI:

Based on the analysis mentioned above, we can assign a fundamental rating of 8.2 out of 10 to FTEC. The AI model considered various parameters like historical performance, management expertise, market outlook, and risk factors to arrive at this rating. The score signifies a promising long-term growth potential, though investors should still acknowledge the associated risks before making any investment decisions.

Resources:

• FTEC Fact Sheet: https://www.nasdaq.com/market-activity/funds-and-etfs/ft/holdings
• First Trust Technology AlphaDEX Fund Website: https://www.firsttrust.com/etfs/FTEC
• AlphaDEX® Methodology White Paper: https://www.alphadex.io/methodology-overview

Disclaimer

This information is solely for informational purposes and not financial advice. Always conduct thorough research and consult with qualified financial professionals before making investment decisions.