FDM Profile
The First Trust Dow Jones Select MicroCap Index Fund is an exchange-traded fund that focuses on investing in the common stocks of U.S. micro-capitalization companies. The fund commits to allocating at least 80% of its net assets, including any investment borrowings, to these micro-cap stocks, which are publicly traded within the United States. Micro-cap companies are typically smaller firms with market capitalizations below $1 billion, offering unique growth opportunities but also carrying higher volatility compared to larger companies.
The fund’s underlying index, the Dow Jones Select MicroCap Index, is designed to capture the performance of a select group of micro-cap stocks that are not only comparatively liquid but also possess strong fundamentals within the micro-cap segment. This index serves as a benchmark for the fund, focusing on companies that have demonstrated financial stability and growth potential relative to their peers. By tracking this index, the fund aims to provide investors with exposure to a segment of the market that is often underrepresented in broader equity portfolios.
Given its focus on micro-cap stocks, the First Trust Dow Jones Select MicroCap Index Fund offers investors the potential for high capital appreciation, as these smaller companies can experience significant growth as they expand their market presence. However, the fund’s emphasis on micro-cap stocks also means it is subject to greater risks, including higher volatility and less liquidity, compared to funds that invest in larger, more established companies. The fund’s strategy is particularly suited for investors who are looking to diversify their portfolios with exposure to emerging growth companies that have the potential to deliver strong returns over time.
The First Trust Dow Jones Select MicroCap Index Fund is managed by First Trust Advisors, a well-respected investment firm known for its expertise in index-based strategies. The fund provides a cost-effective way to gain exposure to the micro-cap segment of the U.S. equity market, allowing investors to participate in the growth of innovative, smaller companies. By focusing on stocks that are both fundamentally strong and relatively liquid, the fund aims to balance the growth potential of micro-cap investments with the need for prudent risk management, making it an attractive option for investors seeking to capitalize on the opportunities within this dynamic market segment.
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