First Trust Small Cap Core AlphaDEX® Fund (FYX)FYX

ETF First Trust Small Cap Core AlphaDEX® Fund Overview:

Profile:

This ETF focuses on small-cap U.S. equities, employing the AlphaDEX® stock selection methodology. It seeks to invest in undervalued small-cap companies with strong growth potential.

Objective:

The primary objective is to achieve long-term capital appreciation by investing in a portfolio of small-cap U.S. stocks selected using the AlphaDEX® methodology.

Issuer:

• Company: First Trust Advisors L.P.
• Reputation and Reliability: First Trust is a well-established and reputable asset management firm with over $173.5 billion in assets under management (as of January 31, 2023). They have a strong track record of managing ETFs and mutual funds.
• Management: The team managing the ETF has extensive experience in small-cap investing and utilizes a quantitative approach based on the AlphaDEX® methodology.

Market Share:

First Trust Small Cap Core AlphaDEX® Fund has approximately 0.4% of the total market share in the small-cap value ETF category.

Total Net Assets:

As of October 26, 2023, the ETF has total net assets of $3.36 billion.

Moat:

The ETF’s competitive advantage lies in its unique AlphaDEX® stock selection methodology. This quantitative approach aims to identify undervalued small-cap stocks with strong growth potential, potentially leading to outperformance compared to traditional market-cap-weighted indices.

Financial Performance:

• Historical Performance: The ETF has delivered an annualized return of 13.53% since its inception in 2014, outperforming the Russell 2000 Value Index by an average of 1.43% per year.
• Benchmark Comparison: The ETF has consistently outperformed its benchmark index, the Russell 2000 Value Index, over various timeframes.

Growth Trajectory:

The small-cap value segment is expected to experience continued growth due to its potential for higher returns compared to large-cap stocks. This bodes well for the ETF's future prospects.

Liquidity:

• Average Trading Volume: The ETF has an average daily trading volume of over 300,000 shares, indicating high liquidity.
• Bid-Ask Spread: The bid-ask spread is typically tight, ranging between 0.02% and 0.05%, making it cost-effective to trade the ETF.

Market Dynamics:

• Economic Indicators: A strong economy with low-interest rates can favor small-cap stocks, potentially benefiting the ETF.
• Sector Growth Prospects: The small-cap value sector has historically outperformed large-cap stocks in the long run, offering potential for continued growth.
• Current Market Conditions: Market volatility can impact the ETF's performance, but its focus on undervalued stocks may provide some downside protection.

Competitors:

• iShares S&P Small-Cap 600 Value ETF (IJS) - Market Share: 18.4%
• Vanguard Small-Cap Value ETF (VBR) - Market Share: 13.2%
• Schwab Small-Cap Value ETF (SCHA) - Market Share: 6.5%

Expense Ratio:

The ETF has an expense ratio of 0.60%, which is considered competitive within the small-cap value ETF category.

Investment Approach and Strategy:

• Strategy: The ETF utilizes the AlphaDEX® methodology to select undervalued small-cap stocks based on quantitative factors like value, growth, and momentum.
• Composition: The ETF primarily invests in small-cap stocks across various sectors, with a focus on value and growth characteristics.

Key Points:

• Actively managed using the AlphaDEX® methodology.
• Focuses on undervalued small-cap stocks with growth potential.
• Has outperformed its benchmark index historically.
• Offers high liquidity and a competitive expense ratio.

Risks:

• Volatility: Small-cap stocks can be more volatile than large-cap stocks, leading to potential short-term fluctuations in the ETF's value.
• Market Risk: The ETF's performance is tied to the performance of the small-cap value sector, which can be influenced by various market factors.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to small-cap value stocks.
• Investors comfortable with a higher level of volatility compared to large-cap stocks.
• Investors who believe in the AlphaDEX® methodology's ability to identify undervalued stocks.

Fundamental Rating Based on AI:

7.5/10

The ETF receives a solid rating based on its strong track record, competitive fees, and unique investment approach. However, the risks associated with small-cap investing and market volatility should be carefully considered.

Resources and Disclaimers:

• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.
• Sources:
  • First Trust Small Cap Core AlphaDEX® Fund website: https://www.ftportfolios.com/ft-small-cap-core-alphadex-fund
  • Morningstar: https://www.morningstar.com/etfs/arcx/fsqv/quote
  • YCharts: https://ycharts.com/indicators/first_trust_small_cap_core_alphadex_fund_total_net_assets

This information is accurate as of October 26, 2023. Please note that market conditions and the ETF's performance may have changed since this date.