The combination of an Average People Pillar rating and a Below Average Process Pillar rating limit  First Trust Dev Mkts Ex-US AlphaDEX® ETF to a Morningstar Medalist Rating of Negative.  The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The strategy gets a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in momentum exposure and volatility exposure compared with category peers. Momentum exposure is attributed to holding stocks currently on a winning streak and selling those that are on a downtrend. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

CNA Financial

Regions Financial

Celestica

Tenneco

Saratoga Invest 6.75 % Notes 2016-30.12.23

Vodafone Group

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Banco Bilbao Vizcaya Argentaria

TotalEnergies SE

Equinor

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. First Trust Dev Mkts Ex-US AlphaDEX® Fd earns a Below Average Process Pillar rating. 

The process benefits from the stability of the management team. Specifically, the fund has not seen a manager change in the last ten years. However, the rating is weakened by the fund's unimpressive long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period. The parent firm's five-year retention rate of 67% also detracts from the process.

 This strategy tends to hold smaller, deeper value companies compared with its average peer in the Foreign Large Blend Morningstar Category. Analyzing additional factors, this strategy has continually had exposure to high-momentum stocks compared with Morningstar Category peers in the last few years. Momentum is based on the premise that stocks that have recently outperformed will continue to outperform, and those that have underperformed will stay behind. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. This strategy also has had an overweight bias to the volatility factor over these years, meaning it has owned companies that have a higher historical standard deviation of returns. Such exposure tends to pay off when markets are hot and to be costly when they are not. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. In addition, this strategy holds highly liquid companies. More-liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to suffer from a significant loss. In this month, the strategy also had more exposure to the Liquidity factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in industrials and energy relative to the category average by 6.5 and 6.4 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and technology, underweight the average by 10.1 and 8.3 percentage points of assets, respectively. The portfolio is composed of 305 holdings and is diversified among those holdings. In its most recent portfolio, 7.1% of the fund’s assets were concentrated in the top 10 fund holdings, compared to the category average's 15.4%.

Below Average

Process

First Trust’s team is good but unexceptional, earning the strategy an Average People Pillar rating. There’s a deep bench of seven managers listed on the fund. Experience on the team is abundant, with 22 years of average portfolio management experience. Together, they manage a total of 108 strategies, with solid long-term prospects. The strategies average a Bronze asset-weighted Morningstar Medalist Rating, indicating a position to deliver positive alpha relative to the category median in aggregate. This group has successfully retained management talent, with no departures in the past five years. 

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Average

People

First Trust meets the industry standard for stewardship, but it could do more to align itself with investors. It earns an Average Parent rating.

This is a team-oriented organization that eschews star managers. While exchange-traded funds represent the bulk of the firm's assets, First Trust bypasses the competitive market for low-cost beta funds, instead opting for complex strategies with higher management fees. However, the firm's focus on ETFs for future product development underpins its commitment to tax efficiency and transparency. Some of its thematic strategies appear trendy, but it stands behind them and rarely liquidates funds. 

The firm is a private partnership, controlled by Jim Bowen, the CEO. Many senior managers are limited partners. This ownership structure helps the firm stay focused on the long term and promotes retention, which has been strong for the investment team. The firm has grown considerably over the past decade and is among the largest providers of actively managed ETFs, as well as unit investment trusts. As it has grown, the firm has expanded its investment team and beefed up its technology infrastructure.

First Trust's focus is on educating advisors and providing them solutions. This may benefit investors indirectly, but First Trust could do more to directly align with investors by cutting fees and limiting trendy strategies.

Parent

First Trust Developed Markets ex-US AlphaDEX fund

FDT tracks an index of international, developed-market stocks, selected by growth and value factors and equal-weighted in tiers.

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Developed-market (DM) household savings recorded a significant gain last year, with an increase equivalent to 10% of combined gross domestic product (GDP). This build-up is likely to bolster consumption as restrictions on economic and social activity are removed and pent-up demand unlocked.

Will Household Savings Provide An Upside Growth Surprise?

FstTr ET AlDx2 Shs First Trust Canada AlphaDEX Fund

First Trust Hong Kong AlphaDEX Fund

FstTr ET AlDx2 Shs First Trust South Korea AphaDEX Fund

WHEATON, Ill.--(BUSINESS WIRE)--First Trust Advisors L.P. (“FTA”) announced today that the reorganizations of First Trust Australia AlphaDEX® Fund (NYSE Arca: FAUS), First Trust Canada AlphaDEX® Fund (Nasdaq: FCAN), First Trust Hong Kong AlphaDEX® Fund (Nasdaq: FHK), and First Trust South Korea AlphaDEX® Fund (Nasdaq: FKO), each an index based exchange-traded fund (“ETF”), managed by FTA, into First Trust Developed Markets ex-US AlphaDEX® Fund (Nasdaq: FDT), an index based ETF managed by FTA, w

First Trust Announces Completion of Reorganizations into First Trust Developed Markets ex-US AlphaDEX® Fund

News for First Trust Developed Markets ex-US AlphaDEX fund ETF (FDT)