FXG Profile
The First Trust Consumer Staples AlphaDEX Fund is designed to provide targeted exposure to the consumer staples sector through an innovative selection process. Under normal market conditions, the fund allocates at least 90% of its net assets, including any borrowings, into common stocks that constitute the underlying index. This approach ensures that the majority of the funds investments are directly linked to the performance of the consumer staples sector, which includes essential goods and services such as food, beverages, and household products.
The underlying index utilized by the fund is a modified equal-dollar weighted index. It focuses on identifying and selecting stocks from the Russell 1000 Index that are part of the consumer staples sector. This index employs the AlphaDEX selection methodology, which aims to generate positive alpha—excess returns relative to traditional passive indices—by using a quantitative approach to stock selection. This method incorporates various financial metrics and factors to identify stocks with higher growth potential and better investment characteristics.
The AlphaDEX methodology distinguishes the fund from traditional passive index funds by emphasizing a dynamic selection process. Instead of merely tracking an index, the methodology seeks to enhance performance by evaluating stocks based on a range of criteria, including value, growth, and momentum factors. This approach aims to capture companies within the consumer staples sector that have the potential to outperform their peers and deliver superior returns.
As a non-diversified fund, the First Trust Consumer Staples AlphaDEX Fund may exhibit a higher concentration in specific stocks within the consumer staples sector compared to more broadly diversified funds. This concentrated approach is designed to leverage the funds selection process and potentially offer enhanced returns by focusing on companies with strong performance metrics. The fund's active management strategy ensures that it remains aligned with its investment goals and the AlphaDEX methodology, striving to deliver competitive returns in the consumer staples sector.
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