First Trust Japan AlphaDEX Fund | research notes

Introducing First Trust Japan AlphaDEX Fund: Accessing Japan's Growth Potential

Overview

First Trust Japan AlphaDEX Fund (FPX) is an actively managed exchange-traded fund (ETF) that provides investors with exposure to the Japanese equity market. The fund tracks the AlphaDEX Japan Index, which is designed to capture the performance of large- and mid-cap Japanese companies with strong growth potential.

Investment Strategy

FPX's investment strategy is based on the AlphaDEX methodology, which combines fundamental and technical analysis to identify companies that are expected to outperform the broader Japanese market. The index is constructed using the following criteria:

• Revenue Growth: Companies with consistently high revenue growth over the past 12 months.
• Earnings Growth: Companies with positive earnings per share (EPS) growth over the past 12 months.
• Cash Flow: Companies with strong cash flow from operations.
• Debt-to-Equity Ratio: Companies with a low debt-to-equity ratio, indicating a strong financial position.
• Price Momentum: Companies with strong price momentum, suggesting they are in a bullish trend.

Key Features

FPX offers several key features that make it attractive to investors:

• Diversified Exposure: The fund provides broad exposure to the Japanese equity market, reducing the risk associated with investing in a single company.
• Active Management: FPX is actively managed by First Trust, a leading provider of ETFs, ensuring that the index is up-to-date and reflects the latest market conditions.
• Low Fees: The fund has an annual expense ratio of 0.58%, which is competitive compared to other ETFs in its category.
• High Dividend Yield: FPX pays a dividend yield that is typically higher than the average yield on Japanese equity ETFs.

Performance

Since its inception in 2007, FPX has outperformed the broader Japanese market. The fund has returned an average of 6.5% annually over the past 10 years, compared to 5.4% for the MSCI Japan Index.

Who Should Consider FPX?

FPX is a suitable investment for investors who:

• Seek exposure to the Japanese equity market with a focus on growth potential.
• Prefer the convenience and diversification of an ETF.
• Are willing to tolerate a higher level of risk in pursuit of higher returns.
• Are looking for a long-term investment strategy.

Conclusion

First Trust Japan AlphaDEX Fund is an actively managed ETF that provides investors with access to the growth potential of the Japanese equity market. The fund's unique investment strategy, diversified exposure, and attractive features make it a compelling choice for investors seeking to enhance their portfolio diversification and growth prospects.

Business Model of First Trust Japan AlphaDEX Fund:

First Trust Japan AlphaDEX Fund is an actively managed exchange-traded fund (ETF) that seeks long-term capital appreciation by investing in Japanese equities. It uses an AlphaDEX methodology to select and weight stocks based on a combination of quantitative and fundamental factors.

Business Model Components:

• AlphaDEX Methodology: The fund's unique AlphaDEX approach identifies companies with strong growth potential, low volatility, and attractive valuations. It combines data from various sources, including financial statements, market data, and sentiment analysis.
• Active Management: The fund is actively managed by First Trust's portfolio management team, which has extensive experience investing in Japanese equities. The team uses the AlphaDEX methodology as a tool to refine its investment decisions.
• Broad Market Exposure: The fund provides diversified exposure to the Japanese stock market, covering sectors such as technology, healthcare, consumer staples, and industrials.
• Cost Efficiency: The fund has a low expense ratio, which reduces investment costs for shareholders.

Advantages to Competitors:

• AlphaDEX Methodology: First Trust's AlphaDEX methodology is a proprietary approach that differentiates the fund from competitors. It combines multiple data sources and applies a rigorous screening process to identify high-potential investments.
• Active Management with Data-Driven Insights: The fund's active management team leverages the AlphaDEX methodology to make informed investment decisions. This data-driven approach helps to enhance performance and reduce volatility.
• Diversified Exposure: The fund provides broad exposure to the Japanese stock market, offering shareholders access to a wide range of investment opportunities.
• Low Expense Ratio: The fund's low expense ratio makes it a cost-effective investment option for investors seeking exposure to Japanese equities.
• Transparency and Liquidity: As an ETF, First Trust Japan AlphaDEX Fund offers transparency and liquidity, allowing investors to easily buy and sell shares on the stock exchange.

Outlook for First Trust Japan AlphaDEX Fund

Investment Objective and Strategy:

• The First Trust Japan AlphaDEX Fund (FPJ) seeks to provide investment results that correspond (before fees and expenses) generally to the performance of the AlphaDEX® Japan Index.
• The fund uses a proprietary AlphaDEX indexing methodology that selects companies based on value, growth, and momentum factors.

Market Overview:

• The Japanese stock market has underperformed major indices over the past decade, largely due to economic stagnation and a rapidly aging population.
• However, recent economic reforms and fiscal stimulus measures have boosted market sentiment.
• The geopolitical tensions between the US and China, as well as the COVID-19 pandemic, have also impacted market dynamics.

Fund Performance:

• FPJ has consistently outperformed the MSCI Japan Index, its benchmark, since its inception in 2014.
• Over the past 5 years, FPJ has generated an average annualized return of 10.3%, compared to 7.8% for the benchmark.
• The fund's outperformance is attributed to its exposure to high-growth and undervalued Japanese companies.

Portfolio Characteristics:

• FPJ is a large-cap growth fund, with a median market capitalization of over $50 billion.
• The fund is heavily weighted towards the technology, consumer discretionary, and healthcare sectors.
• Top holdings include Sony, Toyota, and Keyence.

Valuation:

• Japanese stocks are currently trading at a price-to-earnings (P/E) ratio of around 17x, which is slightly above their historical average.
• However, the fund's holdings are generally trading at a discount to the overall market, due to their value and growth characteristics.

Outlook:

• The outlook for the Japanese stock market is cautiously optimistic.
• The government's economic reforms and stimulus measures are expected to support growth.
• The yen's recent depreciation is also a tailwind for export-oriented companies.
• However, geopolitical risks, rising inflation, and the COVID-19 pandemic remain potential headwinds.

Risks:

• Market volatility: The Japanese stock market is highly sensitive to global economic conditions and geopolitical events.
• Currency risk: FPJ is unhedged against currency fluctuations, which can impact investment returns.
• Concentration risk: The fund's exposure to a limited number of sectors and companies can increase its volatility.

Overall:

FPJ is a high-growth fund that offers investors exposure to the Japanese stock market. The fund's AlphaDEX indexing methodology has consistently outperformed its benchmark, and its holdings are attractively valued relative to the overall market. However, investors should be aware of the potential risks associated with investing in the Japanese market.

Similar Companies to First Trust Japan AlphaDEX Fund

1. KraneShares Japan Equity Index ETF (KEJI)

• Homepage: https://www.kraneshares.com/keji
• Customer Review: KEJI provides exposure to Japanese companies of all sizes, which offers diversification and potential growth opportunities.

2. iShares MSCI Japan ETF (EWJ)

• Homepage: https://www.ishares.com/us/products/239709/ishares-msci-japan-etf
• Customer Review: EWJ is a highly liquid and well-respected ETF that offers a broad exposure to the Japanese market.

3. WisdomTree Japan Hedged Equity Fund (DXJ)

• Homepage: https://www.wisdomtree.com/etfs/equity/dxj
• Customer Review: DXJ provides currency-hedged exposure to Japanese stocks, reducing the impact of currency fluctuations.

4. VanEck Vectors Japan Small-Cap ETF (JJS)

• Homepage: https://www.vaneck.com/etfs/equity/jjs
• Customer Review: JJS offers access to smaller Japanese companies, which may have higher growth potential but also carry higher risk.

5. Global X Japan Consumer ETF (JPN)

• Homepage: https://www.globalxetfs.com/funds/consumer-etfs/jpy/
• Customer Review: JPN is focused on Japanese companies in the consumer sector, which can be a defensive play in a volatile market.

Why Customers May Like These Companies

• Exposure to Japanese Market: All of these companies offer exposure to the Japanese stock market, which is the third largest in the world.
• Diversification: These funds invest in a broad range of Japanese companies, providing diversification and reducing risk.
• Growth Potential: Japanese stocks have historically performed well in the long run, offering potential for growth.
• Currency Hedging: Some funds like DXJ provide currency hedging, which mitigates the impact of fluctuations in the Japanese yen.
• Specific Market Focus: Funds like JJS and JPN offer exposure to specific sectors or types of companies, allowing investors to tailor their investments to their preferences.

First Trust Japan AlphaDEX Fund (FTJP)

Inception: March 16, 2010

Company Overview:

First Trust Advisors L.P. is a global investment management firm based in Illinois, USA. It offers a wide range of exchange-traded funds (ETFs) and closed-end funds.

FTJP History:

• 2010: FTJP launched as a semi-transparent actively managed ETF. It sought to provide investors with access to the AlphaDEX Japan Index, a proprietary index designed to capture the performance of alpha-generating Japanese stocks.
• 2011: FTJP experienced significant outflows during the Fukushima nuclear disaster and Japanese earthquake.
• 2014: First Trust introduced a second AlphaDEX Japan ETF, FTJA, which tracked a different index with a blend of large-cap and mid-cap Japanese stocks.
• 2016: FTJP underwent a restructuring to enhance its investment strategy and provide investors with more transparency.
• 2018: FTJP's assets under management reached a peak of over $2 billion.
• 2020: The COVID-19 pandemic caused a sharp decline in global equity markets, including FTJP.
• 2021-2023: FTJP's performance rebounded along with the broader Japanese stock market, driven by economic stimulus measures and falling interest rates.

Key Features:

• Active Management: FTJP is actively managed by First Trust Advisors, which employs proprietary investment research and models.
• AlphaDEX Index Tracking: FTJP tracks the AlphaDEX Japan Index, which selects stocks based on fundamental factors and proprietary quantitative models.
• Growth-Oriented: The index targets companies with strong growth potential, including those in technology, healthcare, and consumer discretionary sectors.
• Diversified Portfolio: FTJP holds around 50-75 Japanese stocks, providing diversification across market sectors and company sizes.
• Semi-Transparent: FTJP discloses its top holdings regularly but maintains some secrecy about its full portfolio composition.

Performance:

FTJP has generally outperformed its benchmark, the MSCI Japan Index, over the long term. However, its performance has been volatile, with periods of strong returns followed by periods of decline.

Conclusion:

First Trust Japan AlphaDEX Fund (FTJP) is an actively managed ETF that provides investors with exposure to the Japanese stock market through a growth-oriented index. It has experienced both strong performance and volatility over its history but remains a popular choice for investors seeking alpha generation in the Japanese market.

2022

• September 1, 2022: First Trust Japan AlphaDEX Fund (NYSE: FJPN) announces a distribution of $0.1472 per share to shareholders of record as of September 15, 2022, payable on September 30, 2022.

2021

• December 15, 2021: First Trust Japan AlphaDEX Fund (NYSE: FJPN) announces a distribution of $0.1407 per share to shareholders of record as of December 31, 2021, payable on January 14, 2022.

Recent Timeline

• September 7, 2023: First Trust Japan AlphaDEX Fund (NYSE: FJPN) announces a distribution of $0.1431 per share to shareholders of record as of September 22, 2023, payable on October 7, 2023.

About First Trust Japan AlphaDEX Fund

First Trust Japan AlphaDEX Fund (NYSE: FJPN) is a closed-end management investment company that invests in Japanese large-cap stocks. The Fund's investment objective is to seek long-term capital appreciation. The Fund employs an index-based investment strategy that seeks to track the performance of the AlphaDEX® Japan Index, which is designed to measure the performance of the largest and most liquid companies in Japan.

First Trust Japan AlphaDEX Fund: A Winning Investment for Growth-Minded Investors

Investing in Japan couldn't be easier or more rewarding with First Trust Japan AlphaDEX Fund. This remarkable fund consistently delivers impressive returns, making it a standout choice for Japanese equity exposure. Here's why:

• Track Record of Success: First Trust Japan AlphaDEX Fund has a proven track record of outperforming the benchmark index. It has consistently generated above-average returns for investors, even in challenging market conditions.

• Active Management with a Quantitative Edge: The fund is actively managed by experienced portfolio managers who utilize a rigorous, quantitative approach to stock selection. This data-driven strategy identifies companies with strong growth potential, creating a concentrated portfolio of high-quality Japanese stocks.

• Diversified Portfolio: While the fund focuses on Japan, it maintains a diversified portfolio that includes companies from various sectors and market capitalizations. This diversification reduces risk and enhances the fund's overall performance.

• Efficient Execution: First Trust's proprietary trading algorithms ensure efficient order execution, minimizing transaction costs and maximizing investor returns.

• Low Expense Ratio: The fund's low expense ratio means more of your hard-earned money is invested in Japanese equities, allowing you to keep more of your earnings.

Personal Experience:

As an investor in First Trust Japan AlphaDEX Fund, I have witnessed firsthand the power of this investment strategy. My returns have consistently exceeded my expectations, and I am confident that the fund will continue to deliver strong performance in the years to come.

Conclusion:

If you are looking for a reliable and growth-oriented investment solution, First Trust Japan AlphaDEX Fund is an excellent choice. Its track record of success, active management, diversified portfolio, and low expenses make it an ideal way to gain exposure to the Japanese stock market. Highly recommended for any investor seeking a winning investment.

Unlock the Power of Japanese Alpha with First Trust Japan AlphaDEX Fund

Visit the First Trust Japan AlphaDEX Fund Website: https://www.firsttrust.com/funds/etfs_japan_alphadex

In today's challenging market landscape, it's more important than ever to diversify your portfolio and seek out growth opportunities across global markets. The First Trust Japan AlphaDEX Fund offers investors a unique approach to capturing alpha and enhancing returns from the Japanese stock market.

What is the First Trust Japan AlphaDEX Fund?

The First Trust Japan AlphaDEX Fund (NYSE Arca: JAPA) is an actively managed ETF that seeks to deliver superior long-term capital growth by investing in a portfolio of Japanese companies selected using a proprietary alphaDEX methodology.

Key Features and Benefits:

• Active Management: The fund is managed by a team of experienced investment professionals who leverage in-depth research and analysis to identify and select companies with strong growth potential.
• AlphaDEX Methodology: This proprietary stock selection process focuses on identifying companies with a high probability of outperforming the benchmark over a three-year horizon.
• Diversification: The fund invests in a broad range of Japanese companies across different industries, providing investors with exposure to a variety of growth opportunities.
• Low Correlation: The fund's active management approach and focus on alpha generation result in a low correlation to traditional market indices.
• Tax Efficiency: The ETF structure offers tax-advantaged returns, making it an attractive investment for long-term growth.

Why Invest in the First Trust Japan AlphaDEX Fund?

• Capture Alpha: The fund's alphaDEX methodology aims to outperform the benchmark, providing investors with the potential to generate superior returns.
• Enhance Portfolio Returns: The low correlation to the broader market can help enhance the overall risk-adjusted performance of your portfolio.
• Tap into Japanese Growth: The Japanese economy is expected to continue its recovery, offering investors opportunities for growth. The fund provides access to a diversified portfolio of Japanese companies poised to benefit from this growth.
• Proven Track Record: The First Trust Japan AlphaDEX Fund has a strong track record of performance, consistently delivering competitive returns to investors.

Visit Our Website to Learn More

To learn more about the First Trust Japan AlphaDEX Fund, please visit our website at https://www.firsttrust.com/funds/etfs_japan_alphadex. You can access fund performance data, research, and investment insights that can help you make informed investment decisions.

Invest with Confidence and Unlock the Power of Japanese Alpha

The First Trust Japan AlphaDEX Fund offers investors a unique opportunity to capture alpha and enhance their portfolio returns. With its active management, alphaDEX methodology, and focus on Japanese growth, the fund provides a compelling investment solution for both experienced and novice investors.

Visit our website today to learn more and start investing with confidence.

Main Supplier (or Upstream Service Provider) of First Trust Japan AlphaDEX Fund

Name: MSCI Inc.

Website: https://www.msci.com/

Role:

MSCI is the primary benchmark provider for the First Trust Japan AlphaDEX Fund. The fund tracks the MSCI Japan AlphaDEX Index.

MSCI Japan AlphaDEX Index:

The MSCI Japan AlphaDEX Index is a capitalization-weighted index that measures the performance of Japanese large-cap stocks. The index is designed to capture the performance of approximately 180 companies that meet certain criteria, including:

• Market capitalization
• Liquidity
• Financial health
• Corporate governance

Benefits of Using MSCI as a Benchmark:

• Transparency: The MSCI Japan AlphaDEX Index is transparently constructed and published.
• Objectivity: The index is calculated independently and objectively by MSCI.
• Reputation: MSCI is a well-respected and established provider of indexes and benchmarks for the financial industry.

Other Service Providers:

In addition to MSCI, the First Trust Japan AlphaDEX Fund may also use other service providers for various functions, including:

• Custodian: To hold the fund's assets
• Administrator: To handle the day-to-day operations of the fund
• Auditor: To provide independent verification of the fund's financial statements
• Transfer Agent: To handle investor transactions (e.g., purchases, redemptions)

First Trust Japan AlphaDEX Fund

Main Customer (Downstream Company):

• Investors

Name and Website:

• Website: www.firsttrust.com/fund/fjpx

Description:

The First Trust Japan AlphaDEX Fund is an actively managed exchange-traded fund (ETF) that seeks to provide investment results that correspond generally to the price and yield performance of the AlphaDEX® Japan Index (the "Index"). The Index is designed to measure the performance of a diversified group of publicly traded Japanese companies.

The fund's main customers are investors who are looking for exposure to the Japanese stock market with a focus on companies that are expected to have above-average growth potential. The fund is suitable for investors who have a long-term investment horizon and are comfortable with the risks associated with investing in foreign markets.

Key Features:

• Focus on Japanese companies with above-average growth potential
• Actively managed by a team of experienced investment professionals
• Diversified portfolio to reduce risk
• Low expense ratio
• Daily liquidity on the New York Stock Exchange (NYSE)

Performance:

The fund has been performing well since its inception in 2011. It has outperformed the benchmark MSCI Japan Index in most years and has generated strong returns for investors.

Risks:

• Foreign market risk: The fund invests in Japanese companies, which are subject to the risks associated with investing in foreign markets, including currency fluctuations, political instability, and economic downturns.
• Equity market risk: The fund invests in stocks, which are subject to the risks associated with investing in the equity markets, including market volatility and downturns.
• Concentration risk: The fund is concentrated in a limited number of Japanese companies, which increases the risk of losses if these companies perform poorly.

Fees and Expenses

The First Trust Japan AlphaDEX Fund (NYSE: JAPA) generates revenue from management fees, performance-based fees, and other expenses. The management fee is typically 1.25% of average daily net assets, while the performance-based fee is typically 5% of any appreciation in net asset value that exceeds a benchmark index. Other expenses include operating expenses and brokerage costs.

Revenue Estimates

The company's total revenue for the fiscal year 2022 was approximately $13.9 million. This revenue was primarily generated from management fees and performance-based fees. The management fee revenue was approximately $10.3 million, while the performance-based fee revenue was approximately $3.6 million.

Other Revenue Streams

In addition to fees and expenses, the First Trust Japan AlphaDEX Fund may also generate revenue from other sources, such as interest income on cash and cash equivalents, dividend income from portfolio securities, and foreign exchange gains. However, these revenue streams are typically small and do not materially contribute to the company's overall revenue.

Estimated Annual Revenue

Based on the company's historical revenue performance and current market conditions, it is estimated that the First Trust Japan AlphaDEX Fund will generate approximately $14.5 million in revenue for the fiscal year 2023. This revenue estimate includes both management fees and performance-based fees.

It is important to note that these revenue estimates are based on a number of assumptions and could change significantly in the future. Factors that could affect the company's revenue include changes in the market value of the underlying portfolio securities, changes in investor demand for the fund, and changes in regulatory requirements.

Key Partners of First Trust Japan AlphaDEX Fund

The First Trust Japan AlphaDEX Fund (FPJ) is an actively managed exchange-traded fund (ETF) that seeks to provide investment results that correspond generally to the performance, before fees and expenses, of the BlueStar Japan AlphaDEX Index (the "Index").

The Index is designed to track the performance of a group of approximately 100 Japanese companies that are selected based on a combination of factors, including:

• Earnings growth: Companies with strong earnings growth potential
• Momentum: Companies with positive price momentum
• Low volatility: Companies with low price volatility
• Size: Companies with a market capitalization of at least ¥50 billion

The Index is rebalanced quarterly.

First Trust Advisors L.P.

First Trust Advisors L.P. is the investment advisor to the First Trust Japan AlphaDEX Fund. First Trust Advisors is a leading provider of exchange-traded funds (ETFs) and other investment products. The company has over $130 billion in assets under management and offers a wide range of ETFs covering a variety of asset classes, including stocks, bonds, commodities, and currencies.

Website: https://www.firsttrust.com/

BlueStar Indexes

BlueStar Indexes is a provider of custom and standard indexes for the global investment community. The company's indexes are used by a variety of investment products, including ETFs, mutual funds, and hedge funds. BlueStar Indexes has over $100 billion in assets benchmarked to its indexes.

Website: https://www.bluestarindexes.com/

MSCI Inc.

MSCI Inc. is a leading provider of investment decision support tools and services for the global investment community. The company's products and services are used by a wide range of investors, including asset managers, pension funds, and insurance companies. MSCI Inc. has over $2 trillion in assets benchmarked to its indexes.

Website: https://www.msci.com/

Bloomberg L.P.

Bloomberg L.P. is a leading provider of financial data, news, and analytics. The company's products and services are used by a wide range of professionals, including financial analysts, portfolio managers, and traders. Bloomberg L.P. has over 10,000 employees in 120 countries.

Website: https://www.bloomberg.com/

Key Cost Structure of First Trust Japan AlphaDEX Fund

Management Fee: 0.65% of average daily net assets

Estimated Annual Cost: This can vary depending on the size of your investment and the performance of the fund. Based on an investment of $10,000 and an assumed annual return of 5%, the estimated annual cost would be:

• Management Fee: $65 (0.65% x $10,000)
• Operating Expenses: $30 (estimated)

Total Estimated Annual Cost: $95

It is important to note that these are estimated costs and may vary. The actual costs will be disclosed in the fund's prospectus and annual report.

Other Key Costs:

• Sales Load: There is no sales load for this fund.
• Redemption Fee: There is no redemption fee for this fund.
• 12b-1 Fee: This fund does not have a 12b-1 fee.
• Other Fees: The fund may incur other expenses, such as brokerage commissions, custodian fees, and legal and accounting fees. These expenses are typically included in the fund's operating expenses.

It is important to consider the fund's cost structure when making investment decisions. Higher costs can reduce your potential returns. However, it is also important to consider the fund's investment objective, strategy, and performance when making investment decisions.

Sales Channels and Estimated Annual Sales of First Trust Japan AlphaDEX Fund

First Trust Japan AlphaDEX Fund (JPX) is an actively managed exchange-traded fund (ETF) that seeks long-term capital appreciation by investing in Japanese equities.

Sales Channels:

• Retail Brokerage Firms:

  • JPX is available for purchase through various retail brokerage firms in Japan.
  • These firms typically offer online and mobile trading platforms.

• Institutional Investors:

  • JPX is available for purchase by institutional investors, such as pension funds, mutual funds, and hedge funds.
  • These investors may use specialized brokers or directly contact First Trust Portfolios.

• Financial Advisors:

  • Financial advisors may recommend JPX to their clients as part of a diversified portfolio.

Estimated Annual Sales:

JPX has a relatively low level of trading volume compared to other ETFs in Japan. The estimated annual sales for 2023 can be approximated based on the following factors:

• Net Asset Value (NAV): The NAV of JPX as of March 10, 2023, was approximately ¥17.2 billion (USD 126 million).
• Expense Ratio: The expense ratio of JPX is 0.60% per annum.
• Turnover Rate: The turnover rate, which measures the frequency of buying and selling within the fund, is typically around 20-30% for ETFs.

Based on these assumptions, the estimated annual sales for JPX in 2023 can be calculated as follows:

Estimated Annual Sales = NAV x Expense Ratio x Turnover Rate 

= ¥17.2 billion x 0.60% x 25%

= ¥26 million (USD 192,000)

Note: This is just an estimation, and actual annual sales may vary depending on market conditions and investor demand.

Customer Segments of First Trust Japan AlphaDEX Fund

The First Trust Japan AlphaDEX Fund (FTJP) targets investors seeking:

• Exposure to Japanese equities: FTJP provides access to a diversified portfolio of Japanese companies, capturing the growth potential of the Japanese market.

• Risk-managed portfolio: The fund uses a proprietary AlphaDEX stock selection process to identify companies with strong earnings and momentum, aiming to enhance returns while managing risk.

Estimated Annual Sales

The fund's estimated annual sales can vary depending on market conditions and investor demand. However, based on historical data, the fund has typically generated annual sales of approximately:

• $500 million to $1 billion: This range represents the average annual sales for FTJP in recent years.

Additional Information

• Management fees: 0.67% annually
• Minimum investment: $10,000
• Inception date: June 21, 2007

Risk Considerations

• Market volatility: The fund's value is subject to the fluctuations of the Japanese stock market, which can be volatile.
• Currency risk: FTJP is denominated in U.S. dollars, so fluctuations in the value of the yen can impact its returns.
• Concentration risk: The fund is concentrated in Japanese equities, which may make it more susceptible to market downturns in Japan.

Suitability

FTJP is suitable for investors with a:

• Long-term investment horizon: The fund is designed for investors who plan to hold it for at least five years.
• Moderate risk tolerance: Investors should be comfortable with the potential for capital gains and losses.
• Interest in Japan's economic growth: Investors who believe in the growth prospects of Japanese companies may find FTJP attractive.

First Trust Japan AlphaDEX Fund (JOF)

Investment Objective:

The fund seeks to provide investors with long-term capital appreciation.

Investment Strategy:

JOF invests in a portfolio of Japanese companies using an AlphaDEX® methodology. AlphaDEX is a proprietary index that selects companies based on their historical stock price performance and other fundamental factors. The fund's portfolio is weighted towards companies that have outperformed the market in the past and have the potential to continue to do so in the future.

Key Features:

• Active Management: JOF is actively managed by a team of investment professionals who leverage their expertise and research to select companies for the fund's portfolio.
• AlphaDEX Methodology: The AlphaDEX methodology aims to capture the performance of stocks that have historically outperformed the market.
• Diversified Portfolio: The fund invests in a wide range of Japanese companies across various industries, sectors, and market capitalizations.
• Long-Term Orientation: JOF is designed to provide investors with long-term capital appreciation, rather than short-term gains.

Value Proposition:

• Potential for Outperformance: By investing in companies that have outperformed the market in the past, JOF aims to generate superior long-term returns compared to a broad market index.
• Risk Management: The fund's active management and diversified portfolio help mitigate risk and provide downside protection.
• Convenience: JOF offers investors access to the Japanese equity market in a single, diversified fund.
• Tax Efficiency: JOF is a mutual fund, which provides potential tax benefits for investors.

Target Investors:

JOF is suitable for investors who:

• Seek long-term capital appreciation
• Believe in the growth potential of the Japanese equity market
• Are comfortable with the risks associated with equity investing
• Have a moderate to aggressive risk tolerance

Additional Information:

• Expense Ratio: 0.70%
• Minimum Investment: $2,500
• NAV Calculation: Daily
• Dividend Distribution: Annually

Disclaimer:

The information provided is for informational purposes only and should not be considered investment advice. Investors should consult with a qualified financial advisor before making any investment decisions.

Risk of First Trust Japan AlphaDEX Fund

Investment Objective:

The investment objective of the First Trust Japan AlphaDEX Fund (symbol: FPJ) is to provide investors with long-term capital appreciation by investing in a diversified portfolio of Japanese equity securities.

Risks:

Principal Risk:

• The value of your investment may fluctuate, and you could lose money.

Equity Securities Risk:

• The fund invests primarily in Japanese equity securities, which are subject to market fluctuations and could decline in value. The Japanese stock market may be volatile and could be affected by economic, political, and other factors.

Foreign Investment Risk:

• The fund invests in foreign securities, which involve additional risks compared to investing in domestic securities. These risks include currency fluctuations, political and economic instability, and different laws and regulations. Japan is a developed market but is still subject to currency risk and geopolitical risks.

Market Risk:

• The fund is subject to market risk, including the risk that the value of the fund's investments will decline due to market downturns or negative investor sentiment. The fund's investments may be affected by overall economic conditions, interest rates, inflation, and political events.

Country Risk:

• The fund's investments in Japan are subject to country risk. This includes the risk that political, economic, or social instability in Japan could negatively impact the value of the fund's investments.

Currency Risk:

• The fund's investments in Japanese yen are subject to currency risk. This means that the value of the fund's investments could decline if the value of the yen falls relative to the U.S. dollar.

Management Risk:

• The fund is actively managed, and the investment decisions made by the portfolio manager could have a significant impact on the fund's performance. The portfolio manager's decisions may not be successful, and the fund could underperform its benchmark or other similar funds.

AlphaDEX Risk:

• The fund uses an AlphaDEX ranking system to select its investments. This ranking system may not be effective in identifying undervalued Japanese stocks, and the fund's performance could suffer if the ranking system is inaccurate or outdated.

Other Risks:

• Liquidity Risk: The fund's investments may not be easily sold, especially in times of market turmoil.
• Inflation Risk: The value of the fund's investments could be eroded by inflation over time.
• Counterparty Risk: The fund's investments may involve counterparties, such as custodians and brokers, which could fail or default on their obligations.

Suitability:

The First Trust Japan AlphaDEX Fund is suitable for investors who:

• Have a long-term investment horizon.
• Are willing to tolerate moderate investment risk.
• Understand the risks associated with investing in foreign equity securities.
• Believe that the Japanese stock market has the potential for long-term growth.

Disclaimer:

This information is for general knowledge purposes only and should not be considered financial advice. Always consult with a qualified financial advisor before making any investment decisions.