First Trust Energy AlphaDEX® Fund (FXN)

Overview

The First Trust Energy AlphaDEXu00ae Fund (FXN) is designed to track the performance of an index of energy companies selected and weighted using the AlphaDEXu00ae methodology, which aims to identify companies with superior growth potential based on fundamental factors.

Reputation and Reliability

First Trust is a well-established ETF provider known for its innovative investment strategies and reliable fund management.

Management Expertise

First Trust Advisors L.P. has a team of experienced investment professionals dedicated to managing and overseeing its ETF offerings.

Goal

To track the performance of the StrataQuantu00ae Energy Index, which employs a quantitative methodology to select energy companies believed to have the potential for superior risk-adjusted returns.

Investment Approach and Strategy

Strategy: The fund aims to identify and weight energy companies based on growth factors including sales growth, price momentum, and value factors like price to sales and price to cash flow.

Composition The ETF primarily holds stocks of U.S. energy companies across different market capitalizations.

Market Share: FXN holds a moderate market share within the energy ETF sector.

Total Net Assets (AUM): 321900000

Key Competitors

• XLE
• VDE
• IYE

Competitive Landscape

The energy ETF industry is highly competitive, dominated by larger funds like XLE. FXN distinguishes itself through its AlphaDEXu00ae methodology, which can lead to different holdings and potentially higher returns compared to market-cap-weighted ETFs. However, this strategy may also introduce higher volatility and tracking error.

Historical Performance: Historical performance varies depending on market conditions. Investors should consult past performance charts to understand the returns of the ETF over different periods.

Benchmark Comparison: The ETF's performance should be compared to the StrataQuantu00ae Energy Index to assess its effectiveness in tracking the target index.

Expense Ratio: 0.62

Average Trading Volume

FXN exhibits moderate liquidity with an average trading volume of approximately 87,721 shares.

Bid-Ask Spread

The bid-ask spread is generally tight for FXN, reflecting the fund's relative liquidity, but this can widen during times of market stress.

Market Environment Factors

Economic indicators, energy prices, geopolitical events, and changes in energy demand influence FXN's performance.

Growth Trajectory

The growth trajectory depends on the overall health of the energy sector and the effectiveness of the AlphaDEXu00ae methodology in identifying strong-performing companies.

Competitive Edge

FXN's competitive advantage lies in its AlphaDEXu00ae methodology, which seeks to outperform market-cap-weighted energy ETFs by identifying companies with strong growth potential and financial health. This differentiates it from traditional index funds. The strategy involves periodic rebalancing, potentially capturing gains from rising stars within the energy sector. It's an attempt to gain an edge over standard market capitalization-weighted approaches.

Volatility

As an energy sector ETF, FXN is subject to market volatility, especially due to fluctuations in oil and natural gas prices.

Market Risk

The specific risks include commodity price risk, regulatory changes impacting the energy sector, and risks associated with individual energy company performance.

Ideal Investor Profile

Investors seeking targeted exposure to the energy sector with a focus on companies exhibiting strong fundamental characteristics and growth potential may find FXN appealing.

Market Risk

FXN may be suitable for investors with a higher risk tolerance seeking potential outperformance in the energy sector, but it might not be appropriate for risk-averse investors.

First Trust Energy AlphaDEXu00ae Fund (FXN) offers exposure to the energy sector through a unique AlphaDEXu00ae methodology, aiming to identify companies with superior growth potential. While this strategy can provide opportunities for outperformance, it also introduces potential volatility and risk. It suits investors with a higher risk tolerance seeking focused exposure to the energy sector and potential for enhanced returns compared to traditional market-cap-weighted ETFs. Investors should consider their own risk tolerance and investment goals before investing. Its expense ratio is 0.62%.

• XLE
• VDE
• IYE
• OIH
• XOP

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Consult with a qualified financial advisor before making any investment decisions.