First Trust Small Cap Core AlphaDEX® Fund (FYX)

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

Profile:

FYX is an actively managed exchange-traded fund (ETF) that invests in a diversified portfolio of small-cap U.S. stocks. It utilizes the AlphaDEX® stock selection methodology, which focuses on identifying stocks with potential for high alpha generation. The fund aims to provide long-term capital appreciation through a combination of stock price appreciation and dividend income.

Objective:

The primary investment goal of FYX is to outperform the Russell 2000 Index by investing in a portfolio of small-cap stocks with the potential to generate alpha.

Issuer:

First Trust Advisors L.P. is the issuer of FYX.

• Reputation and Reliability: First Trust is a well-established and reputable asset management firm with over $161.5 billion in assets under management (as of October 31, 2023).
• Management: The portfolio management team at First Trust has extensive experience in managing small-cap and alpha-focused investment strategies.

Market Share:

FYX has a market share of approximately 2.5% in the small-cap core alpha ETF category.

Total Net Assets:

As of October 31, 2023, FYX has approximately $1.2 billion in total net assets.

Moat:

• AlphaDEX® Methodology: The proprietary AlphaDEX® stock selection process helps identify stocks with potential for outperformance.
• Experienced Management Team: The portfolio management team has a proven track record of success in managing small-cap and alpha-focused strategies.
• Diversified Portfolio: FYX holds a diversified portfolio of over 700 small-cap stocks, mitigating single-stock risk.

Financial Performance:

• Historical Performance: FYX has outperformed the Russell 2000 Index since its inception in 2006. Over the past three years (as of October 31, 2023), FYX has returned 10.5%, compared to the Russell 2000 Index's return of 7.8%.
• Benchmark Comparison: FYX has consistently outperformed the Russell 2000 Index over various timeframes.

Growth Trajectory:

The small-cap market has historically outperformed the broader market over the long term. FYX is well-positioned to capture this growth potential with its focus on alpha generation.

Liquidity:

• Average Trading Volume: FYX has an average daily trading volume of over 100,000 shares, indicating good liquidity.
• Bid-Ask Spread: The bid-ask spread for FYX is typically narrow, indicating low transaction costs.

Market Dynamics:

• Economic Growth: A strong economy typically benefits small-cap stocks, as these companies tend to be more sensitive to economic cycles.
• Interest Rates: Rising interest rates can negatively impact small-cap stocks, as they often have higher debt levels.
• Sector Performance: The performance of the small-cap sector can impact FYX's returns.

Competitors:

• iShares Core S&P Small-Cap ETF (IJR)
• Vanguard Small-Cap ETF (VB)
• Schwab Small-Cap ETF (SCHA)

Expense Ratio:

FYX has an expense ratio of 0.60%.

Investment Approach and Strategy:

• Strategy: FYX uses the AlphaDEX® stock selection methodology to identify stocks with potential for alpha generation.
• Composition: The fund invests primarily in small-cap U.S. stocks across various industries.

Key Points:

• Actively managed small-cap core alpha ETF
• Utilizes AlphaDEX® stock selection methodology
• Seeks to outperform the Russell 2000 Index
• Experienced management team
• Diversified portfolio
• Strong historical performance

Risks:

• Market Risk: FYX is subject to market fluctuations, which can lead to losses.
• Small-Cap Risk: Small-cap stocks are generally more volatile than large-cap stocks.
• AlphaDEX® Methodology Risk: The performance of the AlphaDEX® methodology is not guaranteed.

Who Should Consider Investing:

FYX is suitable for investors seeking long-term capital appreciation and alpha generation from a portfolio of small-cap stocks. Investors should have a high risk tolerance and a long-term investment horizon.

Fundamental Rating Based on AI:

8.5/10

Justification: FYX has a strong track record of outperformance, an experienced management team, and a robust investment process. The fund's active management and focus on alpha generation further enhance its potential. However, investors should be aware of the inherent risks associated with small-cap stocks.

Resources and Disclaimers:

• First Trust Small Cap Core AlphaDEX® Fund website: https://www.firsttrust.com/etfs/fyx
• Morningstar: https://www.morningstar.com/etfs/arcx/fyx
• ETF.com: https://www.etf.com/FYX

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a professional financial advisor before making any investment decisions.