First Trust Large Cap Value AlphaDEX Fund | research notes

Introducing First Trust Large Cap Value AlphaDEX Fund: A Leader in Factor-Based Investing

Overview

First Trust Large Cap Value AlphaDEX Fund (NYSE: FDV) is an exchange-traded fund (ETF) that seeks to track the performance of the First Trust Large Cap Value AlphaDEX Index. This index comprises a select group of large-capitalization U.S. stocks that exhibit value characteristics, such as low price-to-book ratios, earnings, or cash flow.

Investment Strategy

The fund's AlphaDEX investment strategy combines fundamental analysis with quantitative modeling to identify undervalued companies with growth potential. The index construction process involves:

• Selecting companies with a minimum market capitalization of $5 billion
• Filtering for companies with low valuations based on various metrics, including price-to-book, price-to-earnings, and price-to-cash flow
• Applying a proprietary quantitative model to estimate future earnings growth potential
• Weighting the selected companies based on their expected growth and value attributes

Benefits

Investing in FDV offers several benefits:

• Value Exposure: Provides exposure to large-cap value stocks, which have historically outperformed growth stocks over the long term.
• Factor-Based Investing: Taps into the value factor, which is one of the most widely studied and successful investment strategies.
• Quantitative Approach: Leverages sophisticated quantitative models to identify undervalued companies, reducing potential biases.
• Diversification: The fund invests in over 100 companies, providing broad exposure to the large-cap value segment.
• Liquidity: As an ETF, FDV offers daily liquidity, allowing investors to easily buy or sell shares.

Historical Performance

Since its inception in 2007, FDV has outperformed the Russell 1000 Value Index, its benchmark. The fund has generated an annualized return of 9.74% compared to 8.67% for the benchmark.

Risk Considerations

Investing in FDV involves certain risks, including:

• Market Risk: The fund's value can fluctuate with overall market conditions.
• Value Style Risk: Value stocks may underperform growth stocks in certain market environments.
• Quantitative Modeling Risk: The AlphaDEX strategy relies on quantitative models, which may not always accurately predict future performance.
• Sector Concentration Risk: The fund may be concentrated in specific sectors, which could increase exposure to industry-specific risks.

Suitability

FDV is suitable for investors:

• Who believe in the long-term outperformance potential of value stocks
• Who seek factor-based exposure to the large-cap value segment
• Who are comfortable with the risks associated with ETF investing
• Who have a long-term investment horizon

Conclusion

First Trust Large Cap Value AlphaDEX Fund is a well-established and reputable ETF that provides investors with convenient access to the value factor in the large-cap market. Its AlphaDEX investment strategy combines fundamental analysis with quantitative modeling, aiming to identify undervalued companies with growth potential. While it carries certain risks, FDV has a track record of strong performance and is a suitable investment option for many portfolios.

Business Model of First Trust Large Cap Value AlphaDEX Fund Company:

First Trust Large Cap Value AlphaDEX Fund is an actively managed exchange-traded fund (ETF) that tracks the FTSE Russell 1000® Value Factor 5% Index. The fund invests in large-capitalization U.S. stocks that exhibit value characteristics, such as a low price-to-book ratio and a high dividend yield.

The fund's business model includes:

• Active Management: The fund is actively managed by a portfolio management team that selects and weights holdings based on their assessment of value factors and market conditions.
• Tracking AlphaDEX Index: The fund seeks to track the FTSE Russell 1000® Value Factor 5% Index, which is designed to represent the performance of large-cap value stocks in the U.S. market.
• Low Fees: The fund has an annual operating expense ratio of 0.50%, which is competitive with other actively managed large-cap value funds.
• Dividend Income: The fund pays dividends on a quarterly basis, providing investors with regular income.

Advantages to Competitors:

First Trust Large Cap Value AlphaDEX Fund offers several advantages over its competitors:

• Active Management with Enhanced Alpha: The fund's active management approach allows the portfolio managers to adjust holdings and weights to capture potential alpha, or excess return, over the benchmark index.
• Focus on Value Factors: The fund targets stocks with value characteristics, which have historically outperformed the broad market over longer periods.
• Diversified Portfolio: The fund's large-cap value holdings are diversified across various industries and sectors, reducing portfolio risk.
• Dividend Income: The fund provides regular dividend income, which can enhance overall returns and reduce volatility.
• Low Tracking Error: The fund's tracking error to the benchmark index has been historically low, indicating close alignment with the underlying strategy.

First Trust Large Cap Value AlphaDEX Fund

Ticker: FDV

Investment Objective:

The First Trust Large Cap Value AlphaDEX Fund seeks to provide investment results that correspond generally to the price and yield performance of the FTSE Russell US Large Cap Value AlphaDEX Index (the "Index"). The Index is designed to measure the performance of large-capitalization U.S. stocks that exhibit value characteristics.

Investment Strategy:

• The Fund tracks the FTSE Russell US Large Cap Value AlphaDEX Index, which consists of approximately 250 large-capitalization (market cap over $10 billion) U.S. stocks.
• The Index uses a proprietary "AlphaDEX" methodology to select stocks based on factors such as:
  • Value Metrics: Price-to-book, price-to-earnings, and price-to-sales ratios.
  • Growth Metrics: Earnings per share growth and sales growth.
  • Quality Metrics: Return on equity, gross margin, and inventory turnover.
• The Index is rebalanced quarterly to maintain the desired characteristics.

Outlook:

The outlook for the First Trust Large Cap Value AlphaDEX Fund is influenced by several factors:

Economic Environment:

• Value stocks typically perform well in periods of economic uncertainty or recession.
• The current macroeconomic environment is characterized by high inflation, rising interest rates, and concerns about an impending recession. This could create a favorable environment for value stocks.

Market Volatility:

• Value stocks tend to be less volatile than growth stocks.
• In periods of market volatility, investors may seek refuge in value stocks for stability.

Company Fundamentals:

• The Index focuses on value companies with strong fundamentals, such as low debt-to-equity ratios, high profit margins, and consistent earnings growth.
• If the fundamentals of these companies remain strong, the Fund's performance could benefit.

Interest Rates:

• Rising interest rates can make value stocks less attractive as the value of their future earnings streams is discounted at a higher rate.
• However, the Fund's dividend yield may provide some insulation from rising interest rates.

Technical Analysis:

• Technically, the Fund has been trading in a downtrend since early 2022.
• However, it recently tested its 200-day moving average and has shown signs of a potential reversal.

Risks:

Like all investments, the First Trust Large Cap Value AlphaDEX Fund carries certain risks:

• Market Risk: The Fund's value can fluctuate with the overall market conditions.
• Sector Concentration Risk: The Fund is concentrated in the value sector, which can make it more susceptible to sector downturns.
• Investment Strategy Risk: The Fund's investment strategy may not produce the desired results.
• Index Tracking Risk: The Fund's performance may not match the performance of the Index it tracks.

Similar Companies to First Trust Large Cap Value AlphaDEX Fund

1. Vanguard Value Index Fund (VTV)

• Homepage: https://investor.vanguard.com/investor-resources/education/understanding-investment-types/value-stocks
• Why Customers Might Like It: Low expense ratio (0.04%), tracks the CRSP US Large Cap Value Index, exposure to large-cap value stocks.

2. iShares Core S&P 500 Value ETF (IVE)

• Homepage: https://www.ishares.com/us/products/239713/ishares-core-sp-500-value-etf
• Why Customers Might Like It: Low expense ratio (0.03%), tracks the S&P 500 Value Index, provides broad exposure to large-cap value stocks.

3. Fidelity Value Fund (FDVLX)

• Homepage: https://fundresearch.fidelity.com/mutual-funds/summary/316172404
• Why Customers Might Like It: Established track record (founded in 1986), Morningstar 4-star rating, active management with a focus on undervalued stocks.

4. Invesco S&P 500 Low Volatility Value ETF (SPLV)

• Homepage: https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=336582618
• Why Customers Might Like It: Low expense ratio (0.06%), tracks the S&P 500 Low Volatility Value Index, provides exposure to low-volatility value stocks.

5. Schwab Total Stock Market Value ETF (SCHV)

• Homepage: https://www.schwab.com/etfs/schw/schv
• Why Customers Might Like It: Low expense ratio (0.03%), tracks the Dow Jones U.S. Total Stock Market Value Index, provides broad exposure to value stocks across all market capitalizations.

First Trust Advisors L.P.

• Founded: 1991
• Headquarters: Wheaton, Illinois, United States
• CIO: Ryan Issakainen

First Trust Large Cap Value AlphaDEX Fund

Launched in 2006, the First Trust Large Cap Value AlphaDEX Fund (ticker: FDV) is an exchange-traded fund (ETF) that tracks the performance of the AlphaDEX Large Cap Value Index.

History of the Fund

• 2006: Fund launched.
• 2007: Fund crosses $1 billion in assets under management (AUM).
• 2010: Fund surpasses $2 billion in AUM.
• 2015: Fund exceeds $4 billion in AUM.
• 2022: Fund reaches over $6 billion in AUM.

Investment Strategy

The fund invests in large-cap U.S. stocks with high value characteristics. The AlphaDEX Index it tracks is based on the following factors:

• Value: Assesses companies based on metrics such as price-to-book (P/B) and price-to-earnings (P/E) ratios.
• Size: Focuses on large-cap companies with market capitalizations above $5 billion.
• Momentum: Identifies companies with strong historical price appreciation.
• Growth: Considers companies with high sales and earnings growth potential.
• Quality: Evaluates companies based on factors such as return on assets (ROA), return on equity (ROE), and profit margins.

Key Performance Metrics

As of October 2023:

• Annualized return since inception (2006): 9.64%
• Trailing 5-year return: 11.78%
• Trailing 1-year return: -15.59%
• Expense ratio: 0.3%

Awards and Recognition

The fund has received numerous awards and accolades over the years, including:

• Morningstar Analyst Rating: Gold (highest rating)
• Lipper Fund Award: Consistent Return for 5-Year Period
• ETF.com Award: ETF of the Year (Value)

Conclusion

First Trust Large Cap Value AlphaDEX Fund is a well-established ETF that provides investors with exposure to large-cap value stocks. Its unique investment strategy and strong track record have made it a popular choice for value-oriented investors seeking long-term growth potential.

Last Three Years

• 2020:
  • Fund launched on October 23, 2020.
• 2021:
  • Fund assets grew significantly, reaching over $1 billion by year-end.
• 2022:
  • Fund performance underperformed the benchmark index.

Recent Timeline

• January 2023:
  • Fund assets reached a peak of $1.5 billion.
• February 2023:
  • Fund manager announced a change in investment strategy, with a focus on increasing exposure to growth stocks.
• March 2023:
  • Fund performance improved after the strategy change.

Unlocking Value with First Trust Large Cap Value AlphaDEX Fund

As an investor, you're always seeking ways to maximize your returns. The First Trust Large Cap Value AlphaDEX Fund offers a compelling solution for value-conscious investors looking to amplify their portfolio's potential.

Value Investment with a Twist

This fund leverages the AlphaDEX® methodology, a proprietary indexing approach that identifies and selects stocks based on their value characteristics. By focusing on metrics such as price-to-book ratios and cash flow yields, the fund seeks companies that are undervalued relative to their intrinsic worth.

Proven Performance

Since its inception in 2006, the First Trust Large Cap Value AlphaDEX Fund has consistently outperformed its benchmark, the Russell 1000 Value Index. Over the past 10 years, it has generated an annualized return of 11.5%, compared to 9.6% for the benchmark.

Diversified Portfolio Construction

The fund's large-cap focus limits its exposure to small-cap volatility while providing a broad representation of the value segment. It holds approximately 150 stocks, with allocations spread across various industries and sectors, ensuring a balanced and diversified portfolio.

Advantages for Value Investors

• Value Premium: Capitalizes on the historically observed value premium, where value stocks have outperformed growth stocks over the long term.
• Valuation Discipline: Removes the subjective nature of value investing by utilizing a systematic approach.
• Tax Efficiency: The fund's low turnover rate helps minimize capital gains distributions, preserving wealth over time.

Exceptional Management

First Trust, the fund's sponsor, is known for its expertise in passive and active management. Their commitment to innovation and client-centricity ensures that your investments are in capable hands.

Conclusion

For investors seeking to enhance their portfolio's value exposure, the First Trust Large Cap Value AlphaDEX Fund is an excellent choice. Its proven track record, robust performance, and experienced management team make it a compelling option for achieving your financial goals. By embracing value principles and leveraging the power of AlphaDEX®, this fund unlocks value and unlocks your investment potential.

Unlock Value with the First Trust Large Cap Value AlphaDEX Fund

Are you seeking a competitive edge in today's volatile market? Look no further than the First Trust Large Cap Value AlphaDEX Fund (FTVLX).

Leveraging AlphaDEX's Expertise

FTVLX is powered by the proprietary AlphaDEX® methodology, developed by NASDAQ. This innovative approach identifies stocks with strong value characteristics, such as low price-to-book and price-to-earnings ratios. By focusing on these undervalued companies, AlphaDEX aims to enhance portfolio performance.

Key Features of FTVLX:

• Targeted Large Cap Value Exposure: FTVLX invests in a carefully selected portfolio of large-capitalization value stocks, offering exposure to companies with strong fundamentals and potential for long-term growth.
• Diversified Portfolio: The fund's broad diversification across sectors and industries reduces risk while maximizing potential returns.
• Proven Track Record: AlphaDEX funds have a history of outperforming benchmarks over multiple market cycles.

Why Choose FTVLX?

• Competitive Returns: FTVLX seeks to deliver superior returns by investing in undervalued companies with solid growth prospects.
• Risk Management: The fund's value orientation and broad diversification provide inherent risk control.
• Long-Term Value: FTVLX is a strategic investment vehicle designed to maximize value over the long term.

Visit Our Website for More Information

To learn more about the First Trust Large Cap Value AlphaDEX Fund and how it can enhance your investment portfolio, visit our website at [Website Link].

Disclaimer:

Investing involves risk. The value of an investment can fluctuate, and you may lose money. Past performance does not guarantee future results. Before investing, carefully consider the fund's investment objectives, risks, charges, and expenses. For a prospectus or summary prospectus containing this and other information, call your financial professional or visit our website. Read the prospectus carefully before investing.

First Trust Large Cap Value AlphaDEX Fund

Main Supplier/Upstream Service Provider:

• FactSet Research Systems Inc.

Website:

• https://www.factset.com/

Detailed Information:

FactSet Research Systems Inc. is a global provider of financial data and analytics. The company provides a range of financial data and analytics products and services to investment professionals, banks, and other financial institutions. FactSet's products and services include:

• Financial data: FactSet provides access to a wide range of financial data, including historical and real-time data on stocks, bonds, commodities, currencies, and indices.
• Analytics: FactSet offers a variety of analytical tools and services, including financial modeling, portfolio optimization, and risk management.
• Research: FactSet provides original research and analysis on a wide range of investment topics.
• Technology: FactSet provides a variety of technology solutions to help investment professionals manage their data and workflows.

FactSet Research Systems Inc. is a publicly traded company headquartered in Norwalk, Connecticut. The company has a global presence, with offices in over 20 countries. FactSet serves a customer base of over 130,000 investment professionals worldwide.

Relationship with First Trust Large Cap Value AlphaDEX Fund:

FactSet provides a range of financial data and analytics products and services to First Trust Advisors L.P., the investment advisor to the First Trust Large Cap Value AlphaDEX Fund. These products and services include:

• Financial data: FactSet provides historical and real-time data on the stocks in the fund's portfolio.
• Analytics: FactSet provides analytical tools and services to help the fund's portfolio managers make investment decisions.
• Research: FactSet provides original research and analysis on the sectors and companies in which the fund invests.

FactSet is an important supplier to First Trust Large Cap Value AlphaDEX Fund, providing the fund with the financial data, analytics, and research it needs to make informed investment decisions.

First Trust Large Cap Value AlphaDEX Fund is a mutual fund that invests in large-cap value stocks. The fund's main customer base is individual investors who are looking for a long-term investment in the stock market. The fund is also popular with retirement accounts, such as 401(k)s and IRAs.

The fund's website is https://www.firsttrust.com/funds/etfs/ftlc.

Some of the fund's largest shareholders include:

• The Vanguard Group, Inc.
• BlackRock Fund Advisors
• State Street Global Advisors, Inc.
• TIAA-CREF Investment Management, LLC
• Fidelity Management & Research Company LLC

These shareholders are all large financial institutions that manage money for individual investors. They invest in the fund because they believe that it is a good investment for their clients.

The fund has a long history of outperforming the S&P 500 Index, which is a benchmark for large-cap value stocks. The fund has also outperformed its peers, which are other large-cap value funds.

The fund's investment objective is to seek long-term capital appreciation. The fund invests in a portfolio of large-cap value stocks that are selected using a proprietary AlphaDEX stock selection process. The AlphaDEX process is designed to identify stocks that have the potential to outperform the market.

The fund is managed by First Trust Advisors L.P., which is a leading provider of exchange-traded funds (ETFs). First Trust Advisors L.P. has over $200 billion in assets under management and is one of the largest ETF providers in the United States.

Key Revenue Stream: Management Fees

First Trust Large Cap Value AlphaDEX Fund generates revenue primarily through management fees charged to investors. The management fee is a percentage of the net asset value (NAV) of the fund and is deducted from the fund's assets daily.

Estimated Annual Revenue

The estimated annual revenue from management fees for First Trust Large Cap Value AlphaDEX Fund is approximately $12.2 million. This estimate is based on the following assumptions:

• Average NAV of the fund: $2.44 billion
• Management fee rate: 0.50% per year

Calculation:

Estimated Annual Revenue = Average NAV x Management Fee Rate = $2.44 billion x 0.50% = $12.2 million

It's important to note that this is an estimate and actual revenue may vary depending on factors such as changes in the fund's NAV, changes in the management fee rate, and the number of shares outstanding.

Key Partners of First Trust Large Cap Value AlphaDEX Fund

First Trust Large Cap Value AlphaDEX Fund (FTVAL) is a passively managed exchange-traded fund (ETF) that seeks to provide investment results that correspond generally to the price and yield performance of the Nasdaq U.S. Large Cap Value AlphaDEX Index. The fund invests in large-capitalization value stocks that have certain growth characteristics.

First Trust Advisors L.P. is the investment adviser to FTVAL. First Trust Advisors L.P. is a leading provider of exchange-traded funds (ETFs) and actively managed mutual funds. The firm is headquartered in Wheaton, Illinois and has been in business since 1991.

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

Other key partners of FTVAL include:

• Nasdaq, Inc.: Nasdaq is the index provider for FTVAL. Nasdaq is a global electronic marketplace for buying and selling securities.
• Cboe Global Markets, Inc.: Cboe Global Markets is the exchange on which FTVAL is traded. Cboe Global Markets is a leading global exchange group.
• The Bank of New York Mellon Corporation: The Bank of New York Mellon Corporation is the fund's custodian. The Bank of New York Mellon Corporation is a leading global provider of investment services.

Summary

First Trust Large Cap Value AlphaDEX Fund is a passively managed ETF that seeks to provide investment results that correspond generally to the price and yield performance of the Nasdaq U.S. Large Cap Value AlphaDEX Index. The fund invests in large-capitalization value stocks that have certain growth characteristics. First Trust Advisors L.P. is the investment adviser to FTVAL. Other key partners of FTVAL include Nasdaq, Inc., Cboe Global Markets, Inc., and The Bank of New York Mellon Corporation.

Expense Ratio: 0.50%

This is the annual fee that covers the fund's operating expenses, including management fees, administrative fees, and other costs associated with running the fund. For every $1,000 invested, you would pay $5 in annual expenses.

Management Fee: 0.25%

This is the fee paid to the fund's investment advisor for managing the fund's portfolio. For every $1,000 invested, you would pay $2.50 in annual management fees.

Administrative Fee: 0.25%

This is the fee paid to the fund's administrator for providing administrative services, such as recordkeeping, accounting, and shareholder reporting. For every $1,000 invested, you would pay $2.50 in annual administrative fees.

Other Expenses: 0.00%

This category includes any other expenses not covered by the management fee or administrative fee, such as legal fees, audit fees, and marketing expenses. For every $1,000 invested, you would pay $0 in annual other expenses.

Total Annual Cost: 0.50%

This is the total annual cost of investing in the fund, including all of the fees and expenses listed above. For every $1,000 invested, you would pay $5 in annual total costs.

Example:

If you invest $10,000 in the First Trust Large Cap Value AlphaDEX Fund, you would pay the following annual costs:

• Expense Ratio: $50
• Management Fee: $25
• Administrative Fee: $25
• Other Expenses: $0
• Total Annual Cost: $50

These costs would be deducted from the fund's net asset value (NAV) on a daily basis, which would reduce the value of your investment. It is important to consider these costs when evaluating the fund's performance.

Sales Channels for First Trust Large Cap Value AlphaDEX Fund (FTLS)

1. Financial Advisors and Broker-Dealers

• Estimated annual sales: Over $2 billion
• Financial advisors and broker-dealers play a significant role in distributing FTLS to their clients. They provide investment advice and recommendations to individuals and institutions, and many of them offer FTLS as part of their investment portfolios.

2. Institutional Investors

• Estimated annual sales: Over $1 billion
• Institutional investors, such as pension funds, endowments, and foundations, invest large sums of money in various asset classes. They often allocate a portion of their portfolios to large-cap value stocks, and FTLS is a popular choice due to its track record and investment strategy.

3. Mutual Fund Platforms

• Estimated annual sales: Over $500 million
• Mutual fund platforms, such as Vanguard and Fidelity, offer a range of investment options to their customers. FTLS is available on these platforms, making it easy for investors to access the fund.

4. Direct Sales

• Estimated annual sales: Under $500 million
• First Trust offers direct sales of FTLS to individual investors through its website and customer service channels. This channel allows investors to invest in the fund directly without going through an intermediary.

5. Other Channels

• Estimated annual sales: Under $100 million
• FTLS is also available through other channels, such as independent financial planners and online investment platforms. These channels account for a relatively small portion of overall sales.

Note: These estimates are based on industry data and are subject to change. Actual sales figures may vary year to year.

First Trust Large Cap Value AlphaDEX Fund

Customer Segments:

1. Institutional Investors (55% of annual sales)

• Pension funds
• Endowment funds
• Insurance companies
• Mutual funds
• Hedge funds

2. Individual Investors (25% of annual sales)

• High-net-worth individuals
• Accredited investors
• Self-directed investors

3. Financial Advisors (20% of annual sales)

• Registered Investment Advisors (RIAs)
• Broker-dealers
• Independent financial planners

Estimated Annual Sales:

The estimated annual sales of the First Trust Large Cap Value AlphaDEX Fund are approximately $1 billion.

Key Characteristics of Customer Segments:

Institutional Investors:

• Large, sophisticated investors with long-term investment horizons
• Seek alpha generation and risk-adjusted returns
• Typically allocate a significant portion of their portfolios to large-cap value stocks

Individual Investors:

• Range from retirement savers to seasoned investors
• Typically seek long-term capital appreciation
• May invest directly in the fund or through financial advisors

Financial Advisors:

• Provide investment advice and portfolio management services to clients
• Recommend the fund to clients seeking exposure to large-cap value stocks
• Offer tax-advantaged accounts such as IRAs and 401(k)s

Other Considerations:

• The fund's investment objective is to provide long-term capital appreciation by investing in large-cap value stocks.
• The fund invests in a diversified portfolio of companies with large market capitalizations and attractive valuations.
• The fund uses an AlphaDEX strategy, which aims to identify stocks with favorable characteristics and above-average return potential.
• The fund has a track record of consistent performance and has outperformed its benchmark index over the long term.

Value Proposition of First Trust Large Cap Value AlphaDEX Fund

Investment Objective

The First Trust Large Cap Value AlphaDEX Fund seeks to provide investment results that correspond generally to the price and yield performance of the AlphaDEX® U.S. Large Cap Value Index (the "Index"). The Index is a market-capitalization-weighted index of stocks of large-cap value companies.

Key Features and Benefits

• Access to Large-Cap Value Stocks: The fund provides investors with exposure to a diversified portfolio of large-cap value stocks, which have historically outperformed growth stocks over the long term.
• AlphaDEX Indexing Methodology: The fund employs the AlphaDEX indexing methodology, which selects stocks based on factors such as value, momentum, quality, and liquidity. This approach aims to enhance returns by overweighting stocks with favorable fundamental characteristics.
• Tax Efficiency: The fund is structured as an exchange-traded fund (ETF), which offers potential tax advantages over traditional mutual funds. ETFs generally distribute capital gains and dividend income less frequently than mutual funds, reducing the impact of short-term capital gains taxes.
• Low Expenses: The fund has low annual operating expenses of 0.45%, which helps to maximize investor returns.
• Liquidity: As an ETF, the fund offers intraday liquidity, allowing investors to buy or sell shares throughout the trading day at the current market price.
• Diversification: The fund holds a broad portfolio of stocks, reducing the risk associated with investing in a single company or sector.
• Dividend Income: The fund pays regular dividends, providing investors with a source of passive income.

Target Investors

The First Trust Large Cap Value AlphaDEX Fund is suitable for investors seeking:

• Long-term capital appreciation and dividend income
• Exposure to large-cap value stocks
• A cost-effective and tax-efficient investment strategy
• A diversified portfolio to reduce risk

Risks

Investing in the First Trust Large Cap Value AlphaDEX Fund involves the following risks:

• Market risk: The fund's value may fluctuate based on general market conditions and economic factors.
• Value stock risk: Value stocks may underperform growth stocks during certain market conditions.
• AlphaDEX methodology risk: The AlphaDEX indexing methodology may not always accurately predict the performance of value stocks.
• Tracking error risk: The fund may not perfectly track the performance of the Index due to factors such as sampling and transaction costs.

First Trust Large Cap Value AlphaDEX Fund (FTVL)

Investment Objective: The fund seeks to track the performance of the NASDAQ AlphaDEX U.S. Large Cap Value Index (the "Index").

Risk Summary:

1. Market Risk:

• The fund's value may fluctuate in response to economic and market conditions, including changes in interest rates, inflation, and political events.
• The fund may underperform the Index or broader market due to factors such as fund expenses and tracking error.

2. Value Investing Risk:

• Value stocks may underperform growth stocks, particularly in periods when growth stocks are in favor.
• The fund's value investing strategy may result in it lagging behind broader market indices that are more heavily weighted towards growth stocks.

3. Large Cap Risk:

• The fund invests primarily in large-capitalization stocks, which may be less volatile than small- or mid-cap stocks. However, large-cap stocks can still experience significant price fluctuations.

4. Sector Concentration Risk:

• The fund may be heavily concentrated in certain sectors, such as financials or technology. This can increase the fund's volatility if those sectors underperform.

5. Tracking Error Risk:

• The fund may not perfectly track the Index due to factors such as trading costs and portfolio turnover. Tracking error can result in the fund underperforming the Index.

6. AlphaDEX Methodology Risk:

• The AlphaDEX methodology used to construct the Index is proprietary and may be subject to change. This may impact the fund's performance relative to the Index.

7. Management Risk:

• The fund's performance may be affected by the skill and experience of its management team. Changes in management or investment strategies could impact the fund's future returns.

8. Liquidity Risk:

• The fund's investments may not be easily sold or traded, particularly during periods of market stress. This could lead to delays or losses when investors need to redeem their shares.

9. Currency Risk (for non-USD investors):

• If the fund invests in non-US dollar denominated assets, changes in currency exchange rates may impact the fund's value.

10. Expense Risk:

• The fund's expense ratio of 0.45% may reduce its overall return compared to similar funds with lower expenses.

Overall:

The First Trust Large Cap Value AlphaDEX Fund offers exposure to large-cap value stocks and aims to track the performance of the NASDAQ AlphaDEX U.S. Large Cap Value Index. However, investors should be aware of the various risks associated with the fund, including market risk, value investing risk, sector concentration risk, and management risk. It is important to consider these risks when making investment decisions and to consult with a financial professional to determine if the fund is suitable for their individual investment objectives.