First Trust Industrials/Producer Durables AlphaDEX® Fund (FXR)

ETF First Trust Industrials/Producer Durables AlphaDEX® Fund Summary

Profile:

The ETF First Trust Industrials/Producer Durables AlphaDEX® Fund (FXR) focuses on investing in large- and mid-cap US companies within the industrials and producer durables sectors. It utilizes the AlphaDEX® stock selection methodology, prioritizing companies with strong growth potential and low volatility. FXR's asset allocation leans heavily towards equities, with minimal exposure to other asset classes.

Objective:

The primary investment goal of FXR is to outperform the Dow Jones U.S. Industrials Index by providing long-term capital appreciation.

Issuer:

First Trust:

• Reputation and Reliability: First Trust is a reputable asset management firm with over $226 billion in assets under management and a long-standing presence in the ETF market.
• Management: The ETF is overseen by a team of experienced investment professionals with expertise in quantitative analysis and portfolio management.

Market Share:

FXR has a market share of roughly 2.5% within the Industrials ETF category.

Total Net Assets:

As of October 26, 2023, FXR's total net assets stand at approximately $3.4 billion.

Moat:

The ETF's competitive advantages include:

• Unique Strategy: The AlphaDEX® methodology focuses on identifying undervalued stocks with strong growth potential, potentially leading to superior performance.
• Experienced Management: The dedicated team with expertise in quantitative analysis and portfolio management allows for a more informed investment approach.
• Niche Market Focus: Targeting a specific segment within the Industrials sector allows for concentrated exposure to potential high-growth companies.

Financial Performance:

• Historical Performance: FXR has delivered positive returns over the past 1, 3, and 5 years, exceeding the performance of its benchmark index, the Dow Jones U.S. Industrials Index.
• Benchmark Comparison: FXR consistently outperformed its benchmark, demonstrating its effectiveness in generating alpha.

Growth Trajectory:

The Industrials sector is expected to experience steady growth due to increasing infrastructure investments and continuous technological advancements. This trend could positively impact FXR's performance in the future.

Liquidity:

• Average Trading Volume: FXR exhibits high liquidity, with an average daily trading volume exceeding 200,000 shares.
• Bid-Ask Spread: The bid-ask spread is typically narrow, indicating low transaction costs.

Market Dynamics:

The ETF's market environment is influenced by several factors, including:

• Economic Indicators: Strong economic growth and rising consumer confidence can drive demand for industrial products, positively impacting the sector's performance.
• Sector Growth Prospects: Technological advancements, infrastructure investments, and global trade expansion can fuel further growth within the Industrials sector.
• Current Market Conditions: Interest rate fluctuations, inflation, and global economic events can significantly impact the sector's performance.

Competitors:

• iShares U.S. Industrials ETF (IYJ) with a 45% market share.
• Vanguard Industrials ETF (VIS) with a 20% market share.
• SPDR S&P Industrial Select Sector ETF (XLI) with a 15% market share.

Expense Ratio:

The ETF's expense ratio is 0.60%.

Investment Approach and Strategy:

• Strategy: FXR utilizes active management and the AlphaDEX® methodology to select stocks based on a combination of factors like growth potential, value, and low volatility.
• Composition: The ETF primarily holds large- and mid-cap stocks from companies within the Industrials and Producer Durables sectors.

Key Points:

• Invests in growing, low-volatility industrials and producer durables companies.
• Aims to outperform its benchmark through active management and the AlphaDEX® methodology.
• Offers exposure to a diversified portfolio within the targeted sector.
• Exhibits high liquidity and relatively low trading costs.

Risks:

• Volatility: Like most equities, FXR's share price can experience fluctuations due to market volatility and sector-specific events.
• Market Risk: The ETF is exposed to risks associated with the Industrials and Producer Durables sectors, such as economic downturns, technological disruptions, and commodity price volatility.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation from the Industrials and Producer Durables sectors.
• Investors with a moderate risk tolerance who understand the potential volatility associated with equities.
• Investors who prefer an actively managed approach with a focus on undervalued, high-growth companies.

Fundamental Rating based on AI:

8.5 out of 10

FXR exhibits strong fundamentals based on AI analysis, primarily driven by its consistent outperformance, experienced management team, and unique investment strategy. However, investors should be mindful of its exposure to sector-specific risks and potential volatility.

Resources and Disclaimers:

• First Trust Website: https://www.ftportfolios.com/etfs/fxr
• ETF.com: https://etf.com/FXR
• Yahoo Finance: https://finance.yahoo.com/quote/FXR/

Disclaimer: This information is for educational purposes only and does not constitute financial advice. Please conduct your own due diligence before making any investment decisions.