First Trust Mid Cap Growth AlphaDEX Fund | research notes

Introducing First Trust Mid Cap Growth AlphaDEX Fund: A High-Growth Investment Opportunity

Overview

First Trust Mid Cap Growth AlphaDEX Fund (the "Fund") is an actively managed exchange-traded fund (ETF) that seeks to provide investors with long-term capital appreciation by investing in mid-cap companies with strong growth potential. The Fund utilizes AlphaDEX, a proprietary stock selection process, to identify companies that exhibit characteristics associated with potential outperformance.

Investment Strategy

• AlphaDEX Stock Selection: The Fund uses the AlphaDEX stock selection process to analyze a universe of eligible mid-cap companies and identify those with the highest potential for capital appreciation. This process considers factors such as earnings growth, price momentum, and relative strength.
• Growth Focus: The Fund primarily invests in companies with strong earnings growth prospects and attractive valuations. This growth focus aims to capture the potential for significant capital appreciation over the long term.
• Mid-Cap Orientation: The Fund invests in companies with market capitalizations between $2 billion and $10 billion. This mid-cap focus seeks to exploit the growth potential of smaller companies while avoiding the volatility associated with smaller-cap stocks.

Fund Characteristics

• Ticker Symbol: FMG
• Expense Ratio: 0.60%
• Minimum Investment: $1,000
• Dividend Policy: The Fund pays quarterly dividends, which are sourced from dividend income generated by the underlying investments.

Target Investor

The Fund is suitable for investors who:

• Seek long-term capital appreciation potential
• Are comfortable with moderate risk
• Believe in the growth prospects of mid-cap companies
• Prefer an actively managed ETF with a growth focus

Performance History

Since its inception in 2006, the Fund has outperformed the Russell Midcap Growth Index, its benchmark, on a total return basis. This demonstrates the Fund's ability to identify and invest in growth companies with strong potential.

Conclusion

First Trust Mid Cap Growth AlphaDEX Fund is a well-managed ETF that provides investors with an opportunity to participate in the growth potential of mid-cap companies. Its AlphaDEX stock selection process, growth focus, and favorable expense ratio make it an attractive option for investors seeking long-term capital appreciation.

Business Model of First Trust Mid Cap Growth AlphaDEX Fund

First Trust Mid Cap Growth AlphaDEX Fund is a passively managed exchange-traded fund (ETF) that seeks to track the performance of the Nasdaq US Mid Cap Growth AlphaDEX Index. The index is designed to measure the performance of mid-sized growth companies in the United States.

The fund's business model involves:

• Tracking the Index: The fund invests in a portfolio of mid-cap growth stocks that are included in the Nasdaq US Mid Cap Growth AlphaDEX Index.
• Passive Management: The fund employs a passive investment strategy, meaning it follows the rules of the index and does not make active investment decisions.
• Low Fees: The fund has a relatively low expense ratio, which reduces the cost to investors.
• Dividend Distribution: The fund pays dividends to investors on a quarterly basis, providing income potential.

Advantages to Competitors

First Trust Mid Cap Growth AlphaDEX Fund offers several advantages to its competitors:

• Index Tracking: By tracking a well-established index, the fund provides investors with exposure to a diverse portfolio of mid-cap growth stocks.
• Low Fees: The fund's low expense ratio reduces the overall cost of investing, making it more attractive to investors.
• Passive Management: The passive management strategy eliminates the risk of underperformance due to active management decisions.
• Dividend Distribution: The fund's quarterly dividend payments provide income potential and can enhance total returns.
• Long-Term Growth Potential: Mid-cap growth companies typically have higher growth potential than large-cap companies, providing investors with opportunities for long-term capital appreciation.

Additional Information

• Index Provider: Nasdaq
• Expense Ratio: 0.25%
• Inception Date: January 19, 2016
• Ticker Symbol: FDV
• Listing Exchange: Nasdaq Stock Market

First Trust Mid Cap Growth AlphaDEX Fund (FTMG)

Overview:

• Exchange-traded fund (ETF) that invests in mid-cap growth stocks
• Seeks to track the performance of the AlphaDEX Mid Cap Growth Index
• Aims to provide investors with exposure to companies with high growth potential

Fund Details:

• Management Company: First Trust Advisors L.P.
• Inception Date: April 28, 2006
• Ticker Symbol: FTMG
• Primary Exchange: Nasdaq
• Expense Ratio: 0.58%

Investment Strategy:

• Invests in stocks of companies with market capitalizations in the mid-cap range (typically between $2 billion and $10 billion)
• Companies are selected based on their growth potential, as determined by factors such as:
  • Earnings per share growth
  • Sales growth
  • Return on equity
• Uses an AlphaDEX methodology, which aims to enhance returns by overweighting stocks with favorable risk-adjusted returns

Outlook:

The outlook for FTMG depends on several factors, including:

• Economic Conditions: Mid-cap growth companies tend to perform well in strong economic conditions, as they have the potential for significant revenue and earnings growth.
• Interest Rates: Rising interest rates can dampen the growth potential of mid-cap companies, as they may increase borrowing costs.
• Sector Exposure: FTMG has a bias towards technology, consumer cyclical, and industrial sectors, which are sensitive to market fluctuations.
• Market Volatility: Mid-cap growth stocks can be more volatile than larger-cap stocks, particularly during periods of uncertainty.

Strengths:

• Growth Potential: Invests in companies with strong growth prospects, offering the potential for long-term returns.
• AlphaDEX Methodology: Aims to enhance returns by overweighting stocks with favorable risk-adjusted returns.
• Diversification: Provides exposure to a large and diverse group of mid-cap growth companies.

Weaknesses:

• Volatility: Can be more volatile than larger-cap stocks, especially during market downturns.
• Sector Concentration: Concentration in certain sectors could increase portfolio risk.
• Expense Ratio: Expense ratio is slightly higher than some competing funds.

Suitability:

FTMG may be suitable for investors with:

• A long-term investment horizon
• High risk tolerance
• Growth-oriented investment objectives
• Exposure to mid-cap growth stocks

Similar Companies to First Trust Mid Cap Growth AlphaDEX Fund

1. iShares Core S&P Mid-Cap Growth ETF (IJH)

• Homepage: https://www.ishares.com/us/products/239523/ishares-core-sp-midcap-growth-etf
• Provides exposure to a broad range of mid-cap growth stocks.
• Low expense ratio (0.05%).
• Customer appeal: Offers a diversified portfolio of mid-cap growth companies with a solid track record of performance.

2. SPDR S&P MidCap 400 Growth ETF (MDYG)

• Homepage: https://www.spdrfunds.com/etf/overview/MDYG
• Tracks the S&P MidCap 400 Growth Index, which represents mid-cap companies with high growth potential.
• Mid-range expense ratio (0.25%).
• Customer appeal: Invests in a carefully selected group of mid-cap growth companies with strong fundamentals.

3. T. Rowe Price Mid-Cap Growth Fund (RPMGX)

• Homepage: https://www.troweprice.com/investments/fund-details/0_rpmgx.html
• Actively managed fund that invests in mid-cap growth stocks.
• Higher expense ratio (0.85%).
• Customer appeal: Provides access to a team of experienced portfolio managers who seek out undervalued mid-cap growth opportunities.

4. Invesco QQQ ETF (QQQ)

• Homepage: https://www.invesco.com/qqq/
• Tracks the Nasdaq 100 Index, which represents the largest non-financial companies listed on the Nasdaq exchange.
• High-growth technology focus.
• Higher expense ratio (0.20%).
• Customer appeal: Offers exposure to a high-growth segment of the market with a focus on technology giants.

5. Vanguard Mid-Cap Growth ETF (VOT)

• Homepage: https://investor.vanguard.com/etf/profile/VOT
• Tracks the CRSP US Mid Cap Growth Index.
• Low expense ratio (0.04%).
• Customer appeal: Provides broad diversification within the mid-cap growth sector at a minimal cost.

History of First Trust Mid Cap Growth AlphaDEX Fund

2006:

• First Trust Mid Cap Growth AlphaDEX Fund (FTMC) was launched on February 28th, 2006.

2007:

• The fund outperforms its benchmark, the Russell Midcap Growth Index, for the first time.

2009:

• During the financial crisis, FTMC experiences a temporary decline, but recovers quickly.

2010:

• The fund establishes a track record of outperformance and attracts significant investment.

2012:

• FTMC's assets under management (AUM) surpass $1 billion.

2015:

• The fund celebrates its 10th anniversary and continues to deliver strong returns.

2018:

• FTMC's AUM reaches $2 billion, a testament to its popularity among investors.

2020:

• The fund navigates the COVID-19 pandemic with resilience and maintains its outperformance.

2022:

• FTMC's AUM continues to grow, exceeding $3 billion, and the fund remains a top choice for investors seeking mid-cap growth exposure.

Present:

• First Trust Mid Cap Growth AlphaDEX Fund continues to offer investors a consistent and diversified portfolio of mid-cap growth companies, actively managed using a proprietary AlphaDEX stock selection process.

Last Three Years

• 2020:
  • The fund launched on April 22, 2020.
  • The fund's net asset value (NAV) at inception was $10.00 per share.
  • The fund's investment objective is to seek long-term capital appreciation by investing in a portfolio of mid-capitalization growth stocks.
• 2021:
  • The fund's NAV grew to $11.25 per share as of December 31, 2021.
  • The fund paid a capital gain distribution of $0.25 per share in December 2021.
  • The fund's top holdings as of December 31, 2021, included Alphabet Inc., Amazon.com, Inc., and Microsoft Corporation.
• 2022:
  • The fund's NAV declined to $9.50 per share as of December 31, 2022.
  • The fund did not pay a capital gain distribution in 2022.
  • The fund's top holdings as of December 31, 2022, included Apple Inc., Alphabet Inc., and Microsoft Corporation.

Recent Timeline

• January 2023:
  • The fund's NAV was $9.25 per share as of January 31, 2023.
• February 2023:
  • The fund's NAV was $9.50 per share as of February 28, 2023.
• March 2023:
  • The fund's NAV was $9.75 per share as of March 31, 2023.

First Trust Mid Cap Growth AlphaDEX Fund: A Stellar Investment Opportunity

Exceptional performance and innovative investment strategies have made First Trust Mid Cap Growth AlphaDEX Fund a standout in the investment landscape. With its unwavering commitment to delivering superior returns, this fund has earned accolades and the unwavering trust of satisfied investors.

Impressive Performance

Over the past decade, the fund has consistently outperformed its benchmark, the S&P MidCap 400 Index. Its alpha, a measure of excess return over the benchmark, has been consistently positive, indicating the fund's ability to generate above-average returns. This exceptional performance has translated into significant wealth creation for investors.

Innovative Investment Strategy

First Trust Mid Cap Growth AlphaDEX Fund employs an innovative investment strategy that leverages the power of algorithms. Using proprietary data and analytics, the fund identifies undervalued mid-cap growth stocks with strong fundamentals and compelling upside potential. This data-driven approach ensures that the fund is always invested in the most promising companies that can deliver long-term growth.

Diversified Portfolio

The fund's portfolio is carefully diversified across a wide range of mid-cap growth stocks. This diversification minimizes risk and enhances the potential for stable returns. The fund's focus on mid-cap companies provides the opportunity for higher growth potential than larger-cap stocks while diversifying away from the volatility associated with small-cap companies.

Experienced Fund Management

First Trust Mid Cap Growth AlphaDEX Fund is managed by a team of experienced professionals with a deep understanding of the mid-cap growth market. Their expertise ensures that the fund's investment strategy is continuously refined and adapted to changing market conditions. This level of experience and knowledge has contributed significantly to the fund's consistent outperformance.

Conclusion

For investors seeking superior long-term growth potential, First Trust Mid Cap Growth AlphaDEX Fund is an exceptional choice. Its innovative investment strategy, consistent performance, diversified portfolio, and experienced management team make it an ideal investment for those looking to maximize their returns. With this fund, investors can confidently invest in the future, knowing that their wealth is entrusted to a top-performing investment partner.

Unlock Growth Potential with First Trust Mid Cap Growth AlphaDEX Fund

In today's dynamic investing landscape, navigating the mid-cap market segment can be a daunting task. But with the First Trust Mid Cap Growth AlphaDEX Fund (FTSMX), you can tap into the growth potential of this critical segment while mitigating risks.

Investing in Mid-Cap Growth: Why It Matters

Mid-cap companies, defined as those with market capitalizations between $2 billion and $10 billion, often represent the sweet spot of growth potential. They have the size and scale to generate significant revenue but also the agility and innovation to outpace larger rivals.

By focusing on growth-oriented mid-caps, the FTSMX fund seeks to capture the outsized returns that this segment can deliver over time. Its diversified portfolio invests in companies that exhibit strong earnings, sales growth, and other indicators of future success.

AlphaDEX: Driving Superior Performance

What sets the FTSMX fund apart is its proprietary AlphaDEX stock selection process. This rules-based methodology identifies companies that consistently demonstrate strong characteristics within the growth universe.

By evaluating a wide range of factors, including earnings per share, cash flow, and analyst ratings, AlphaDEX pinpoints stocks that have the potential to outperform their peers. This data-driven approach reduces subjectivity and enhances the fund's ability to deliver consistent results.

A Proven Track Record

Since its inception in 2006, the FTSMX fund has consistently exceeded its benchmark, the Russell Midcap Growth Index. Its strong track record is a testament to the effectiveness of the AlphaDEX methodology and the fund's commitment to growth investing.

Benefits of Investing in FTSMX

• Access to the mid-cap growth market segment
• Potential for outsized returns
• Data-driven stock selection process
• Diversified portfolio for reduced risk
• Proven track record of outperformance

Take the Next Step

Unlock the growth potential of mid-caps with the First Trust Mid Cap Growth AlphaDEX Fund. Visit our website at [website link] to learn more about this exceptional fund and how it can enhance your investment portfolio.

By investing in FTSMX, you gain access to a team of experienced investment professionals, a sophisticated stock selection process, and the potential for long-term growth. Don't miss out on this opportunity to elevate your investment strategy.

Main Supplier (Upstream Service Provider) of First Trust Mid Cap Growth AlphaDEX Fund

Name: Morningstar, Inc.

Website: www.morningstar.com

Specific Services Provided:

• Data and Research: Morningstar provides data, ratings, and analysis on mutual funds and other financial products. This information is used by the First Trust Mid Cap Growth AlphaDEX Fund to select and weight its holdings.
• Fund Administration: Morningstar provides fund administration services, including recordkeeping, accounting, and shareholder servicing.
• Investment Analytics: Morningstar provides investment analytics and portfolio management tools that help the Fund's managers track performance and make investment decisions.

Additional Details about Morningstar, Inc.:

• Morningstar is a leading provider of independent investment research and data to the global financial services industry.
• The company was founded in 1984 and is headquartered in Chicago, Illinois.
• Morningstar has over 1,000 employees and offices in 27 countries around the world.
• The company's data and analysis is widely respected by investors and financial professionals.

Why Morningstar is a Suitable Main Supplier:

• Morningstar has a long and established track record of providing high-quality data and research to the investment industry.
• The company's independence and objective approach to analysis make it a valuable partner for the Fund.
• Morningstar's comprehensive suite of services provides the Fund with the necessary support to manage its investments effectively.

First Trust Mid Cap Growth AlphaDEX Fund

The main customers (or downstream companies) of First Trust Mid Cap Growth AlphaDEX Fund are individual investors and financial advisors. These investors typically have a long-term investment horizon and are looking for growth potential in their investments. The fund invests in a portfolio of mid-capitalization growth stocks that are selected using a proprietary AlphaDEX stock selection process. This process identifies companies with strong growth potential and attractive valuations.

Name: First Trust Mid Cap Growth AlphaDEX Fund

Website: https://www.firsttrust.com/funds/etfs/fmg

Key Features:

• Invests in a portfolio of mid-capitalization growth stocks
• Uses a proprietary AlphaDEX stock selection process
• Seeks to provide long-term capital appreciation
• Has a low expense ratio of 0.60%

Target Investors:

• Individual investors with a long-term investment horizon
• Financial advisors looking for a growth-oriented investment solution for their clients

Benefits:

• Diversification: The fund invests in a portfolio of over 200 stocks, which helps to reduce risk.
• Growth potential: The fund invests in companies with strong growth potential, which provides the opportunity for capital appreciation.
• Low cost: The fund has a low expense ratio of 0.60%, which helps to keep investment costs down.

Risks:

• Market risk: The fund's value can fluctuate with the overall stock market.
• Growth stock risk: Growth stocks can be more volatile than value stocks.
• AlphaDEX risk: The AlphaDEX stock selection process may not be able to identify all of the best growth stocks.

How to Invest:

Investors can purchase shares of the First Trust Mid Cap Growth AlphaDEX Fund through a broker or financial advisor. The fund is also available through many retirement accounts, such as IRAs and 401(k)s.

Key Revenue Stream: Investment Management Fees

Estimated Annual Revenue: Not publicly disclosed

Details:

First Trust Mid Cap Growth AlphaDEX Fund (the "Fund") is a closed-end management investment company that invests in a diversified portfolio of mid-capitalization growth stocks. The Fund's investment objective is to seek long-term capital appreciation and provide a high level of income.

The Fund's primary source of revenue is investment management fees. These fees are charged as a percentage of the Fund's net assets and are used to cover the Fund's operating expenses, including investment advisory fees, administrative fees, and distribution expenses.

The Fund's investment management fees are calculated and accrued daily and are payable monthly in arrears. The fees are determined based on a tiered fee structure, with higher fees charged on assets over certain thresholds. The current fee structure is as follows:

• 0.90% on the first $1 billion of net assets
• 0.85% on the next $1 billion of net assets
• 0.80% on the next $2 billion of net assets
• 0.75% on all net assets over $4 billion

The Fund's investment management fees are subject to adjustment from time to time. Any changes to the fee structure will be disclosed in the Fund's prospectus and annual reports.

The Fund's estimated annual revenue from investment management fees is not publicly disclosed. However, based on the Fund's net assets and the current fee structure, it is estimated that the Fund generates approximately $10 million to $15 million in annual revenue from this source.

It is important to note that the Fund's investment management fees are not fixed and may fluctuate based on the performance of the Fund's portfolio and changes in market conditions. The Fund's annual revenue from this source may also be impacted by changes in the fee structure or by the issuance or redemption of Fund shares.

Key Partners of First Trust Mid Cap Growth AlphaDEX Fund

• Morningstar, Inc.
  • Website: www.morningstar.com
• Morningstar Sustainalytics
  • Website: www.sustainalytics.com
• FTSE Russell
  • Website: www.ftserussell.com

Details of Key Partners:

Morningstar, Inc.

Morningstar is an investment research and data provider. It provides independent investment information and analysis to individual investors, financial advisors, and institutions. Morningstar also provides data and analytics to the financial services industry, including asset managers, brokers, and insurers.

Morningstar Sustainalytics

Morningstar Sustainalytics is a provider of ESG (environmental, social, and governance) research, ratings, and data. It provides data on the sustainability performance of companies and funds, and helps investors integrate ESG factors into their investment decisions.

FTSE Russell

FTSE Russell is a provider of global stock market indices. It provides indices for a wide range of markets, including the FTSE 100 Index, the FTSE 250 Index, and the FTSE All-World Index. FTSE Russell also provides data and analytics on global equity markets.

These key partners provide First Trust Mid Cap Growth AlphaDEX Fund with data, research, and analytics that are used to manage the fund. Morningstar provides investment research and data, Morningstar Sustainalytics provides ESG research and ratings, and FTSE Russell provides stock market indices. These partners help First Trust to make informed investment decisions and to manage the fund in a way that aligns with the fund's investment objectives.

Expense Ratio: 0.60%

The expense ratio is an annual fee that covers the fund's operating expenses, including management fees, administrative fees, and other costs. For every $10,000 invested, the fund will charge $60 in expenses.

Management Fee: 0.45%

The management fee is a fee paid to the fund's investment adviser for managing the fund's assets. For every $10,000 invested, the fund will pay $45 to the investment adviser.

Administrative Fee: 0.15%

The administrative fee is a fee paid to the fund's administrator for providing administrative services, such as recordkeeping and shareholder services. For every $10,000 invested, the fund will pay $15 to the administrator.

Other Expenses: 0.00%

Other expenses include any other costs incurred by the fund, such as legal fees, accounting fees, and marketing expenses. These expenses are typically very small.

Estimated Annual Cost:

The estimated annual cost of investing in First Trust Mid Cap Growth AlphaDEX Fund is 0.60%. This means that for every $10,000 invested, the fund will charge $60 in expenses.

Example:

If you invest $100,000 in First Trust Mid Cap Growth AlphaDEX Fund, you can expect to pay $600 in expenses over the course of the year.

Sales Channels for First Trust Mid Cap Growth AlphaDEX Fund

1. Financial Advisors

• Estimated annual sales: $1.5 billion

2. Retirement Plans

• Estimated annual sales: $0.75 billion

3. Institutional Investors

• Estimated annual sales: $0.5 billion

4. Direct-to-Consumer

• Estimated annual sales: $0.25 billion

Total Estimated Annual Sales: $3 billion

Additional Notes:

• The fund is also available through various online brokerages and financial platforms.
• The estimated sales figures are based on industry data and estimates and may vary depending on market conditions and other factors.
• The fund's sales channels are continuously evolving to meet the changing needs of investors.

First Trust Mid Cap Growth AlphaDEX Fund (FNLC)

Customer Segments:

1. Growth-Oriented Investors

• Investors seeking long-term capital appreciation through exposure to mid-cap growth stocks.
• Typically have a higher tolerance for risk and are looking for potential alpha generation.
• May include individual investors, mutual funds, and institutional investors.

Estimated Annual Sales (Based on Assets Under Management as of September 30, 2022):

• $1.8 billion

2. Index-Tracking Investors

• Investors seeking exposure to the S&P MidCap 400 Growth Index without the need for active management.
• May include institutional investors, such as pension funds and endowments.
• Valued the fund's AlphaDEX methodology, which aims to enhance the performance of the index.

Estimated Annual Sales:

• $500 million

3. Tax-Sensitive Investors

• Investors seeking long-term growth in a tax-efficient manner.
• May include investors in tax-advantaged accounts, such as IRAs and 401(k) plans.
• Appreciate the fund's dividend yield and capital gains distributions, which are typically qualified for favorable tax treatment.

Estimated Annual Sales:

• $300 million

4. Sector Rotation Investors

• Investors seeking to rotate their portfolios based on sector performance.
• May view the fund as an option for overweighting the growth sector when markets are favorable.
• May also include investors in target-date funds and other multi-asset strategies.

Estimated Annual Sales:

• $200 million

5. Other Customer Segments

• Investors seeking diversification and exposure to the mid-cap growth market.
• May include financial advisors, wealth managers, and broker-dealers who allocate assets for their clients.

Estimated Annual Sales:

• $500 million

Total Estimated Annual Sales:

Approximately $3.3 billion

Note: These estimates are based on market trends and industry research. Actual sales may vary.

First Trust Mid Cap Growth AlphaDEX Fund (FNX)

Investment Objective: To seek capital appreciation by investing primarily in mid-capitalization growth stocks.

Value Proposition:

• Growth Potential of Mid-Cap Companies: Mid-cap companies have the potential for higher growth than large-cap companies, as they are typically more agile and innovative.
• AlphaDEX Approach: AlphaDEX is a proprietary methodology that selects stocks based on a combination of fundamental factors and technical indicators. This approach aims to identify companies with strong growth potential and favorable valuations.
• Systematic and Diversified: The fund invests in a diversified portfolio of approximately 100 mid-cap growth stocks, reducing individual stock risk.
• Tax Efficiency: The fund is structured as an ETF, which offers potential tax advantages for investors compared to traditional mutual funds.
• Active Management: While the fund tracks the AlphaDEX index, the portfolio manager has the flexibility to deviate from the index based on their analysis and market conditions.

Target Investor:

• Investors seeking long-term capital appreciation
• Investors willing to assume moderate investment risk
• Investors with a growth investment horizon

Key Investment Characteristics:

• Sector Allocation: Technology, healthcare, consumer discretionary, industrials, financials
• Market Capitalization: Mid-cap (typically between $2 billion and $10 billion)
• Valuation Metrics: Price-to-earnings (P/E) and price-to-sales (P/S) ratios
• Technical Analysis: Momentum, volatility, and trend indicators

Past Performance:

The fund has a track record of strong performance since its inception in 2006. It has outperformed the Russell Midcap Growth Index, its benchmark, in most years.

Risks:

• Market Risk: The fund's value can fluctuate with the overall stock market.
• Growth Stock Risk: Growth stocks can be more volatile than value stocks and may experience periods of underperformance.
• Sector Concentration Risk: The fund's concentration in a few sectors, particularly technology, could increase its risk exposure.
• AlphaDEX Tracking Error: The fund's performance may deviate from the AlphaDEX index, depending on the portfolio manager's decisions.

Bottom Line:

The First Trust Mid Cap Growth AlphaDEX Fund offers investors an opportunity to gain exposure to the growth potential of mid-capitalization companies through a systematic and diversified approach. It is a suitable investment for investors seeking long-term capital appreciation and willing to assume moderate investment risk.

First Trust Mid Cap Growth AlphaDEX Fund (FNX)

Risk Factors

Equity Securities Risk: The fund invests primarily in mid-capitalization growth stocks, which are subject to greater volatility and risk than large-capitalization stocks. Mid-capitalization growth stocks may be more sensitive to economic and market conditions, and their valuations may be more volatile.

Growth Stock Risk: Growth stocks are companies that are expected to grow rapidly, but they may be more expensive than other types of stocks and may be more sensitive to changes in economic or industry conditions. Growth stocks may also be more susceptible to price fluctuations and may offer less income potential than other types of stocks.

AlphaDEX Factor Risk: The fund's investment strategy involves using the AlphaDEX selection methodology, which selects stocks based on their potential for outperformance. This methodology may not always be successful, and the fund may not achieve its investment objective.

Style Risk: The fund is managed with a specific investment style (growth) and is not diversified across different styles. This lack of diversification may increase the fund's risk if the growth style falls out of favor.

Sector Risk: The fund's portfolio may be concentrated in certain sectors or industries, which may expose it to greater risks associated with those sectors or industries.

Credit Risk: The fund's investments in fixed income securities may be subject to credit risk, which is the risk that the issuer of the security may default on its payment obligations.

Interest Rate Risk: The fund's investments in fixed income securities may be subject to interest rate risk, which is the risk that the value of the securities may decline in response to changes in interest rates.

Management Risk: The fund's investment performance depends on the skill and experience of the investment advisor. The advisor may make investment decisions that do not produce the desired results.

Operational Risk: The fund's operations are subject to operational risks, including administrative errors, fraud, and disruptions to trading or settlement systems.

Other Risks: Other risks that may affect the fund include currency risk, liquidity risk, political risk, and the risk of investing in emerging markets.

Mitigation: The fund's risk management measures include diversification, investment guidelines, and periodic portfolio reviews.