FAB Profile
The First Trust Multi Cap Value AlphaDEX Fund is designed to offer investors exposure to a diversified portfolio of value stocks across large, mid, and small-cap segments of the U.S. equity market. The fund seeks to track the performance of the NASDAQ AlphaDEX Multi Cap Value Index, which selects stocks from the NASDAQ US 500 Large Cap Index, NASDAQ US 600 Mid Cap Index, and NASDAQ US 700 Small Cap Index. The selection process is driven by the AlphaDEX methodology, which aims to identify stocks with the potential to generate positive alpha, or risk-adjusted returns, relative to traditional benchmarks.
The AlphaDEX methodology employed by the fund's underlying index involves a rigorous screening process that ranks stocks based on various growth and value factors, including price appreciation, sales growth, book value, and cash flow. Stocks that exhibit strong value characteristics are then selected and weighted according to their rankings, allowing the fund to tilt towards those securities that are expected to outperform based on historical risk-adjusted returns. This approach differentiates the fund from traditional market-cap-weighted indices, providing investors with a dynamic and potentially higher-performing value-oriented portfolio.
The First Trust Multi Cap Value AlphaDEX Fund typically invests at least 90% of its net assets in the common stocks that comprise the index. By focusing on value stocks across different market capitalizations, the fund offers a broad and diversified exposure to companies that may be undervalued by the market but have strong fundamentals. This multi-cap strategy allows the fund to capitalize on investment opportunities across the full spectrum of the U.S. equity market, from large, established companies to smaller, more nimble enterprises.
As a passively managed exchange-traded fund (ETF), the First Trust Multi Cap Value AlphaDEX Fund seeks to closely replicate the performance of its underlying index, while keeping costs low for investors. The fund is well-suited for those who are looking for a value-oriented investment strategy with the potential for higher returns through a disciplined and systematic stock selection process. Its diversified nature across large, mid, and small-cap stocks also makes it a compelling choice for investors seeking broad-based exposure to the U.S. value equity market.
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