First Trust Materials AlphaDEX® Fund (FXZ)

Overview

The First Trust Materials AlphaDEXu00ae Fund (FXZ) seeks investment results that correspond generally to the price and yield of the StrataQuantu00ae Materials Index. The fund employs a smart beta strategy, selecting and weighting materials sector stocks based on growth factors including sales to price ratio, earnings per share, and momentum, as well as value factors including book value to price ratio, cash flow to price ratio, and return on assets. The ETF provides exposure to US materials companies.

Reputation and Reliability

First Trust is a well-established ETF provider known for its innovative and diverse ETF offerings, generally seen as reputable and reliable.

Management Expertise

First Trust Advisors L.P. has a team of experienced professionals managing its ETF portfolios.

Goal

The fund seeks investment results that correspond generally to the price and yield, before fees and expenses, of the StrataQuantu00ae Materials Index.

Investment Approach and Strategy

Strategy: The fund utilizes a smart beta approach, selecting and weighting stocks based on a proprietary index that considers growth and value factors.

Composition The ETF holds primarily US-listed common stocks within the materials sector.

Market Share: FXZ holds a significant market share within the materials sector ETF market, but faces competition from larger, more established funds.

Total Net Assets (AUM): 376598453

Key Competitors

• Materials Select Sector SPDRu00ae Fund (XLB)
• Vanguard Materials ETF (VAW)
• iShares U.S. Basic Materials ETF (IYM)

Competitive Landscape

The materials sector ETF market is competitive, with XLB dominating in terms of AUM. FXZ differentiates itself through its smart beta, AlphaDEXu00ae strategy, potentially offering higher returns but possibly increasing volatility. XLB and VAW are more passively managed, tracking market-cap weighted indexes, offering broader exposure with potentially lower risk than FXZ.

Historical Performance: Historical performance data should be sourced from financial data providers. This is unavailable in this restricted response.

Benchmark Comparison: Benchmark comparison should be sourced from financial data providers. This is unavailable in this restricted response.

Expense Ratio: 0.62

Average Trading Volume

The ETF exhibits moderate liquidity based on average daily trading volume, making it relatively easy to buy and sell shares.

Bid-Ask Spread

The bid-ask spread is generally tight, reflecting reasonable liquidity, but can widen during periods of market volatility.

Market Environment Factors

Economic growth, commodity prices, infrastructure spending, and global trade policies significantly impact the materials sector and FXZ's performance.

Growth Trajectory

FXZ's growth trajectory is tied to the performance of the underlying materials sector, changes in the index methodology, and investor demand for smart beta strategies.

Competitive Edge

FXZ's primary advantage lies in its AlphaDEXu00ae selection methodology, which aims to identify materials companies with strong growth and value characteristics. This differentiates it from traditional market-cap weighted ETFs. The fund's unique stock selection process may lead to outperformance during certain market conditions. However, this strategy can also lead to higher volatility. First Trust's brand recognition provides an additional advantage.

Volatility

FXZ may exhibit higher volatility compared to broader market or market-cap weighted materials ETFs due to its stock selection methodology.

Market Risk

The ETF is subject to market risk inherent in the materials sector, including commodity price fluctuations, regulatory changes, and economic cycles.

Ideal Investor Profile

The ideal investor is one seeking targeted exposure to the US materials sector, comfortable with potentially higher volatility, and believes in the AlphaDEXu00ae methodology to identify undervalued or growth-oriented companies.

Market Risk

The ETF may be best for active traders or those seeking to enhance returns within a materials sector allocation, rather than passive, long-term index followers.

First Trust Materials AlphaDEXu00ae Fund (FXZ) is a smart beta ETF offering exposure to the US materials sector through a proprietary stock selection methodology. It aims to outperform market-cap weighted indexes by focusing on companies with strong growth and value characteristics. While the fund's unique approach may provide enhanced returns, it also carries the risk of higher volatility. Therefore, FXZ is most suitable for investors with a higher risk tolerance and a specific interest in the materials sector and the AlpaDEXu00ae methodology.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor. Market share data is based on publicly available information and may not be exact.