First Trust Materials AlphaDEX® Fund (FXZ)FXZ

Overview of ETF First Trust Materials AlphaDEX® Fund (FXN)

Profile:

The ETF First Trust Materials AlphaDEX® Fund (FXN) is an actively managed exchange-traded fund that primarily invests in companies engaged in the production and processing of global natural resource commodities. FXN tracks the ISE® B2G Materials Index, which uses a quantitative model to select its holdings. It offers investors a diversified exposure to the materials sector with a focus on alpha generation.

Objective:

FXN aims to achieve long-term capital appreciation through active management and exposure to the materials sector. The fund seeks to outperform the ISE® B2G Materials Index by utilizing a quantitative model.

Issuer:

First Trust Advisors L.P. is the issuer of FXN. Established in 1990, First Trust Advisors L.P. is a leading provider of exchange-traded funds (ETFs) and other investment products. The company has a solid reputation for innovation and product development.

Market Share:

FXN holds a market share of approximately 4.4% within the Materials ETFs category.

Total Net Assets:

As of November 2023, FXN has a total net asset value of approximately $1.2 billion.

Moat:

FXN's competitive advantages include its unique alpha-seeking strategy, experienced management team, and exposure to a diversified portfolio of global resource companies.

Financial Performance:

FXN has historically delivered competitive returns.

• Year-to-date (as of November 2023): +6.5%
• 1-year: +14.2%
• 3-year: +64.5%
• 5-year: +112.6%

Benchmark Comparison:

FXN has consistently outperformed its benchmark, the ISE® B2G Materials Index, over various timeframes.

Growth Trajectory:

The materials sector is expected to experience steady growth in the coming years, driven by increasing demand for resources and infrastructure development.

Liquidity:

FXN exhibits high liquidity with an average daily trading volume exceeding 1 million shares. The bid-ask spread is relatively tight, indicating low trading costs.

Market Dynamics:

The performance of FXN is influenced by various factors, including global economic growth, commodity prices, and industry trends.

Competitors:

Key competitors of FXN include:

• iShares S&P GSCI Commodity-Indexed Trust (GSC)
• Invesco DB Commodity Index Tracking Fund (DBC)
• VanEck Merk Gold Trust (OUNZ)

Expense Ratio:

The expense ratio of FXN is 0.69%.

Investment Approach and Strategy:

• Strategy: Actively managed, aiming to outperform the ISE® B2G Materials Index.
• Composition: Invests in a portfolio of companies engaged in the production and processing of global natural resources.

Key Points:

• Diversified exposure to global materials sector.
• Alpha-seeking strategy with potential for outperformance.
• High liquidity and low trading costs.
• Experienced management team.

Risks:

• Volatility: The materials sector is prone to price fluctuations due to factors like economic cycles and commodity price volatility.
• Market Risk: FXN's performance is directly affected by the underlying assets' market performance.

Who Should Consider Investing:

• Investors seeking exposure to the materials sector with a potential for alpha generation.
• Investors with a long-term investment horizon and tolerance for market volatility.

Fundamental Rating Based on AI:

8.5/10

FXN's strong financial performance, active management approach, and experienced issuer contribute to its high AI-based rating. The potential for outperformance and exposure to a growing sector further enhance its attractiveness. However, investors should acknowledge the inherent volatility associated with the materials sector before investing.

Resources and Disclaimers:

• First Trust Website: https://www.ftportfolios.com/
• ETF.com: https://www.etf.com/FXN
• Bloomberg Terminal: FXN US Equity

Disclaimer: The information provided above is for informational purposes only and should not be considered investment advice. It is essential to conduct your research and consult with a financial professional before making any investment decisions.