First Trust Utilities AlphaDEX® Fund (FXU)

Overview

The First Trust Utilities AlphaDEXu00ae Fund (FXU) is designed to provide enhanced index representation of the utilities sector by using the AlphaDEXu00ae stock selection methodology, which aims to select stocks based on growth factors including 3, 6, and 12-month price appreciation, sales to price and one year sales growth, and, separately, on value factors including book value to price, cash flow to price, and return on assets.

Reputation and Reliability

First Trust is a well-established ETF provider with a reputation for innovation and offering a variety of actively managed and factor-based ETFs.

Management Expertise

First Trust has a team of experienced investment professionals managing its ETF offerings, with expertise in portfolio construction and factor-based investing.

Goal

The investment objective of the Fund is to seek investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the StrataQuantu00ae Utilities Index.

Investment Approach and Strategy

Strategy: The ETF utilizes a proprietary AlphaDEXu00ae methodology to select and weight stocks within the utilities sector, aiming to outperform traditional market-cap weighted indexes.

Composition The ETF primarily holds stocks of companies in the utilities sector, including electric, gas, and water utilities.

Market Share: FXU holds a small-to-moderate market share within the utilities ETF sector.

Total Net Assets (AUM): 340000000

Key Competitors

• Utilities Select Sector SPDRu00ae Fund (XLU)
• Vanguard Utilities ETF (VPU)
• iShares U.S. Utilities ETF (IDU)

Competitive Landscape

The utilities ETF market is dominated by a few large, passively managed ETFs. FXU's active management and factor-based approach differentiates it, potentially offering higher returns but also introducing more risk. Competitors like XLU and VPU are typically lower cost and have greater liquidity, while FXU attempts to outperform through stock selection within the utilities sector.

Historical Performance: Past performance is not indicative of future results. Please refer to official fund documents for complete details.

Benchmark Comparison: Performance relative to the StrataQuantu00ae Utilities Index and other passively managed utility ETFs determines the efficiency of the AlphaDEXu00ae strategy.

Expense Ratio: 0.63

Average Trading Volume

The average trading volume for FXU is moderate, indicating reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread for FXU is typically competitive, reflecting good market depth.

Market Environment Factors

Interest rate changes, regulatory policies, infrastructure spending, and commodity price fluctuations directly impact the utilities sector and, consequently, FXU's performance.

Growth Trajectory

FXU's growth trajectory depends on the effectiveness of its AlphaDEXu00ae methodology in identifying undervalued utilities stocks and adapting to changing market conditions. Changes in sector allocation and stock selection could affect performance.

Competitive Edge

FXU's competitive edge lies in its use of the AlphaDEXu00ae methodology, which seeks to identify and select utilities stocks based on a combination of growth and value factors. This active management approach distinguishes it from passively managed utilities ETFs. The rules based methodology removes emotions from stock selection and strives to generate alpha. However, the efficacy of the methodology and its ability to outperform a passive benchmark vary with market conditions.

Volatility

FXU's volatility is comparable to other utilities sector ETFs, although the active management strategy may introduce slightly higher volatility.

Market Risk

FXU is subject to market risk, including fluctuations in interest rates, regulatory changes, and economic cycles, which can negatively impact the utilities sector.

Ideal Investor Profile

FXU is suitable for investors seeking exposure to the utilities sector with the potential for enhanced returns through active management, and who understand the associated risks.

Market Risk

FXU may be suitable for long-term investors with a moderate risk tolerance who are looking for potential outperformance in the utilities sector.

First Trust Utilities AlphaDEXu00ae Fund (FXU) is an actively managed ETF that employs the AlphaDEXu00ae methodology to select and weight utilities stocks. It aims to outperform traditional market-cap weighted utilities ETFs by focusing on both growth and value factors. While offering the potential for higher returns, it also carries a higher expense ratio than passively managed competitors. Its suitability depends on an investor's risk tolerance, investment horizon, and belief in the effectiveness of the AlphaDEXu00ae strategy.

Data Sources:

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

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Market share data is estimated and may vary based on source. Consult with a financial advisor before making investment decisions.