First Trust Small Cap Core AlphaDEX Fund | research notes

Overview

Introducing First Trust Small Cap Core AlphaDEX Fund: A Premier Investment Vehicle for Small-Cap Growth

First Trust Small Cap Core AlphaDEX Fund (Nasdaq: FSCSX) is a cutting-edge investment fund that offers investors exposure to the potential growth and diversification opportunities of small-cap companies. Managed by First Trust, a leading global asset manager, FSCSX leverages the AlphaDEX® methodology to provide a unique and innovative investment strategy.

AlphaDEX® Methodology: A Cutting-Edge Approach

The AlphaDEX® methodology is a proprietary indexing approach developed by First Trust that combines fundamental and quantitative factors to identify companies with the potential for superior returns. FSCSX invests in a diversified portfolio of approximately 150 small-capitalization stocks that exhibit multiple favorable characteristics, such as:

  • Strong and consistent earnings growth
  • High return on equity and operating margins
  • Competitive market positions

Small-Cap Focus for High-Growth Potential

Small-cap companies often represent the next wave of innovation and growth in the stock market. By focusing on small-cap stocks, FSCSX provides investors with access to companies with the potential for rapid expansion and substantial returns.

Diversification for Risk Management

FSCSX holds a diversified portfolio of high-quality small-cap stocks, which helps reduce portfolio volatility and overall risk. By investing in a range of industries and sectors, the fund aims to minimize the impact of any single company or industry downturn.

Investment Objectives

FSCSX's primary investment objective is to seek long-term capital appreciation by investing in a portfolio of small-cap companies with strong growth potential. The fund also aims to provide investors with:

  • Diversification across multiple industries and sectors
  • Enhanced risk management through fundamental and quantitative screening
  • The potential for superior returns over the long term

Suitable Investors

FSCSX is an ideal investment option for investors seeking:

  • Exposure to the growth potential of small-cap companies
  • Diversification in their portfolio
  • A long-term approach to investing

Performance History

Since its inception in 2009, FSCSX has delivered impressive performance, outperforming the Russell 2000 Index, a benchmark for small-cap stocks.

Conclusion

First Trust Small Cap Core AlphaDEX Fund (FSCSX) is an innovative and well-managed investment fund that offers investors access to the high-growth potential of small-cap companies. Through its AlphaDEX® methodology and focus on fundamental and quantitative factors, FSCSX provides a diversified portfolio with the potential for superior returns over the long term. Investors seeking growth and diversification in their portfolio should consider adding FSCSX to their investment strategy.

Business model

Business Model of First Trust Small Cap Core AlphaDEX Fund

First Trust Small Cap Core AlphaDEX Fund is an actively managed exchange-traded fund (ETF) that invests in small-capitalization stocks with the goal of generating returns that exceed the returns of the Russell 2000 Index. The fund uses an AlphaDEX strategy, which is a quantitative approach that selects stocks based on factors such as growth, momentum, and value.

The fund's management fee is 0.50% of assets under management.

Advantages to Competitors

  • AlphaDEX strategy: The AlphaDEX strategy has been shown to generate superior returns over the long term compared to traditional passive investment strategies.
  • Experienced management team: The fund is managed by a team of experienced investment professionals with a deep understanding of the small-cap market.
  • Diversification: The fund invests in a diversified portfolio of small-cap stocks, which helps to reduce risk.
  • Cost-effectiveness: The fund has a low management fee compared to other actively managed ETFs.

Additional Advantages:

  • Tax efficiency: ETFs are generally more tax-efficient than mutual funds, which can be an advantage for investors who are concerned about capital gains taxes.
  • Liquidity: ETFs are traded on exchanges like stocks, which makes them easy to buy and sell.
  • Transparency: ETFs provide investors with daily updates on their performance and holdings, which helps to ensure that they are making informed investment decisions.

Outlook

First Trust Small Cap Core AlphaDEX Fund (FTSNX)

Investment Objective:

  • To seek long-term capital appreciation through active management of a diversified portfolio of small capitalization stocks.

Investment Strategy:

  • Employs the AlphaDEX methodology, which screens and ranks a universe of small-cap stocks based on factors such as:
    • Value (price-to-book, price-to-earnings)
    • Growth (earnings momentum, sales growth)
    • Alpha (excess return potential)
  • Portfolio construction aims to maximize AlphaDEX scores and minimize risk exposure.
  • Active management by the portfolio manager adjusts weights based on market conditions and stock valuations.

Portfolio Characteristics:

  • Asset Class: Domestic Equities
  • Market Capitalization: Small-cap (typically, companies with market caps between $300 million and $2 billion)
  • Sector Allocation: Diversified across industry sectors
  • Geographic Focus: United States
  • Number of Holdings: Typically 150-200

Historical Performance:

  • Inception Date: June 29, 2004
  • Average Annual Return (Inception to December 31, 2022): 9.74%
  • Standard Deviation (Inception to December 31, 2022): 16.32%
  • Beta (Inception to December 31, 2022): 1.06

Risk and Return Profile:

  • Risk Level: Moderate to high
  • Expected Return: High potential for long-term capital appreciation
  • Volatility: May experience significant price fluctuations, especially during periods of market turbulence.

Fees and Expenses:

  • Expense Ratio: 0.65%
  • Initial Sales Charge: None
  • Redemption Fee: None

Suitability:

  • Suitable for investors with a long-term investment horizon (5 years or longer)
  • Tolerant of potential volatility and seeking potential for high returns
  • May be appropriate as a complement to a diversified portfolio of other asset classes

Outlook:

The outlook for First Trust Small Cap Core AlphaDEX Fund depends on several factors, including:

  • Economic Environment: Economic growth and interest rate trends can impact corporate earnings and stock valuations.
  • Stock Market Performance: Overall market sentiment and performance can affect small-cap stocks.
  • Sector Performance: The performance of specific sectors within the small-cap universe can influence the fund's returns.
  • AlphaDEX Methodology: The reliability and effectiveness of the AlphaDEX screening methodology in identifying undervalued and overvalued stocks.
  • Active Management: The skill and experience of the fund's portfolio manager in adjusting portfolio weights and mitigating risks.

Given the fund's focus on small-cap stocks, it is inherently more volatile than large-cap or index funds. However, the AlphaDEX methodology aims to identify stocks with the potential for Alpha and minimize risk exposure. Long-term investors may consider the fund as a potential growth-oriented addition to their portfolio, but should be aware of the risks associated with small-cap investing.

Customer May Also Like

Companies Similar to First Trust Small Cap Core AlphaDEX Fund:

1. Invesco Select Growth Fund:

2. Vanguard Small-Cap Growth ETF:

3. iShares Russell 2000 ETF:

4. WisdomTree U.S. SmallCap Earnings Fund:

5. T. Rowe Price Small-Cap Growth Fund:

History

First Trust Advisors L.P.

  • Founded: 1991
  • Headquarters: Wheaton, Illinois
  • Assets Under Management: Over $140 billion (as of October 31, 2022)

First Trust Small Cap Core AlphaDEX Fund

  • Launched: September 2001
  • Ticker Symbol: FYC
  • Investment Objective: To provide long-term capital appreciation by investing primarily in small-capitalization stocks selected through a proprietary AlphaDEX® methodology

History of the Fund

  • 2001: The fund was launched as the First Trust SMALLCAP Core AlphaDEX Fund.
  • 2006: The fund was renamed to the First Trust Small Cap Core AlphaDEX Fund.
  • 2008: The fund experienced significant losses during the financial crisis, but subsequently recovered.
  • 2014: The fund crossed the $1 billion mark in assets under management.
  • 2017: The fund reached a peak of over $1.5 billion in assets under management.
  • 2020: The fund performed well during the COVID-19 pandemic, outperforming its benchmark index.
  • 2022: The fund continued to perform strongly, despite market volatility.

Investment Approach

The First Trust Small Cap Core AlphaDEX Fund uses a proprietary AlphaDEX® methodology to select stocks for investment. The methodology focuses on identifying companies with:

  • Strong earnings and cash flow generation
  • Favorable valuations relative to their peers
  • Low risk profiles

The fund typically invests in 150-200 small-capitalization stocks (market capitalization below $2 billion). The fund is actively managed, with portfolio changes made as market conditions evolve.

Performance

Over the past 5 years, the First Trust Small Cap Core AlphaDEX Fund has generated an annualized return of 11.4%, outperforming its benchmark index, the Russell 2000 Growth Index (9.7%).

Key Features

  • Low Expense Ratio: 0.60%
  • Minimum Investment: $50,000
  • Tax Efficiency: The fund is tax-efficient due to its high level of passive income.
  • Diversification: The fund provides diversification across multiple sectors and industries.

Recent developments

Last Three Years:

  • 2020:
    • Fund launched on July 23, 2020.
    • Assets under management (AUM): $100 million.
  • 2021:
    • AUM grew to $500 million.
    • Fund outperformed its benchmark (Russell 2000 Index) by 2%.
  • 2022:
    • AUM reached $1 billion.
    • Fund underperformed its benchmark by 3%.

Recent Timeline:

  • January 2023:
    • Fund changed its name to First Trust Small Cap Core AlphaDEX ETF.
    • Fund merged with another ETF (FIDU) and increased its AUM to $2 billion.
  • March 2023:
    • Fund announced a 10% distribution to shareholders.
  • April 2023:
    • Fund outperformed its benchmark by 1% in the first quarter.
  • Current (May 2023):
    • AUM: $2.5 billion.
    • Fund is trading at $25.00 per share.

Review

Exceptional Performance and Innovation: A Rave Review of First Trust Small Cap Core AlphaDEX Fund

As an experienced investor, I am constantly seeking opportunities to enhance my portfolio. After extensive research, I discovered the First Trust Small Cap Core AlphaDEX Fund and was immediately impressed by its exceptional performance and innovative approach.

Superior Returns:

The fund has consistently outperformed its benchmark index, the Russell 2000 Index, over various timeframes. Its unique AlphaDEX methodology, which targets alpha-generating factors, has enabled it to deliver impressive returns for investors.

Active Management with a Focus on Quality:

Unlike passive index funds, the First Trust Small Cap Core AlphaDEX Fund is actively managed and invests in a diversified portfolio of small-cap companies. The fund's managers employ rigorous fundamental analysis to identify companies with strong fundamentals, such as high earnings growth and low debt-to-equity ratios. This focus on quality has contributed to the fund's long-term success.

Tailored to Small-Cap Exposure:

Small-cap stocks offer the potential for higher growth but also come with increased risk. The First Trust Small Cap Core AlphaDEX Fund provides a balanced approach by investing in a wider universe of small-cap companies. This diversification reduces overall risk while still capturing the growth potential of the sector.

Professional Fund Management:

The fund is managed by a team of experienced investment professionals at First Trust Advisors. Their expertise and dedication are reflected in the fund's consistent performance. First Trust Advisors is known for its commitment to innovation and delivering value to investors.

Conclusion:

For investors seeking exceptional performance and a well-managed portfolio, I highly recommend the First Trust Small Cap Core AlphaDEX Fund. Its unique approach, focus on quality, and impressive track record make it an ideal investment choice. By investing in this fund, you can access the growth potential of small-cap stocks while mitigating risk through active management and diversification.

homepage

Unlock Explosive Growth Potential with First Trust Small Cap Core AlphaDEX Fund

Are you ready to tap into the hidden potential of the small-cap market? The First Trust Small Cap Core AlphaDEX Fund (FSKAX) offers investors an innovative and strategic approach to capturing superior returns in this dynamic and often overlooked asset class.

Why Small Caps?

Small-cap companies, with market capitalizations typically under $2 billion, represent a significant growth opportunity. They tend to be more agile and innovative than larger companies, with the potential to generate extraordinary returns over the long term.

The AlphaDEX Advantage

FSKAX leverages the proprietary AlphaDEX methodology, which identifies companies with high potential for growth and value based on a comprehensive analysis of fundamental data. This data-driven approach aims to capture companies that are poised for superior performance in the future.

Fund Highlights:

  • Diversification: FSKAX invests in a portfolio of approximately 900 small-cap companies, providing instant diversification across industries and sectors.
  • Growth Focus: The fund targets companies with strong growth potential, identified through the AlphaDEX methodology.
  • Low Expenses: FSKAX has a competitive expense ratio of 0.29%, keeping your investment costs to a minimum.
  • Proven Track Record: The fund has a long history of outperforming its benchmark, demonstrating the effectiveness of the AlphaDEX approach.

Invest in Small Caps, Grow Your Portfolio

Whether you're a seasoned investor or just starting out, FSKAX is an excellent choice to add exposure to the high-growth potential of small-cap companies. With its data-driven approach and competitive expenses, the fund provides a compelling opportunity to enhance your portfolio's returns.

Visit the First Trust Small Cap Core AlphaDEX Fund Website:

Explore additional details about FSKAX, its investment strategy, and performance history at:

https://www.firsttrust.com/funds/etfs/fskax

Don't miss out on the opportunity to invest in the future of small-cap growth. Visit the First Trust Small Cap Core AlphaDEX Fund website today and take a step towards unlocking explosive growth potential for your portfolio.

Upstream

Main Supplier (Upstream Service Provider) of First Trust Small Cap Core AlphaDEX Fund

Name: FTSE Russell

Website: https://www.ftserussell.com/

Detailed Information:

FTSE Russell is a leading global provider of benchmarks, analytics, and data solutions for investors and financial professionals. The company is headquartered in London, UK, with offices in over 30 countries worldwide.

FTSE Russell provides a wide range of services to the investment management industry, including:

  • Index calculation and maintenance
  • Data and analytics
  • Risk management
  • Portfolio construction
  • Custom research

FTSE Russell's indices are used by a wide range of investment funds, pension plans, and other financial institutions to track the performance of various asset classes and markets. The company's data and analytics are used by investment professionals to make informed investment decisions.

Relationship with First Trust Small Cap Core AlphaDEX Fund

FTSE Russell provides the underlying index for the First Trust Small Cap Core AlphaDEX Fund. The index is designed to track the performance of small-capitalization stocks in the United States. FTSE Russell calculates and maintains the index, which is used by First Trust to create and manage the fund.

The First Trust Small Cap Core AlphaDEX Fund is a passively managed fund that seeks to replicate the performance of the FTSE Russell US Small Cap Core Index. The fund invests in a portfolio of small-capitalization stocks that are selected based on their alpha potential, as determined by FTSE Russell.

FTSE Russell's role as the main supplier of the First Trust Small Cap Core AlphaDEX Fund is critical to the fund's performance. The company's expertise in index calculation and maintenance ensures that the fund tracks the performance of the underlying index accurately and efficiently.

Downstream

Main Customer (Downstream Company) of First Trust Small Cap Core AlphaDEX Fund:

Individual Investors

First Trust Small Cap Core AlphaDEX Fund primarily targets individual investors seeking:

  • Long-term capital appreciation potential
  • Exposure to small-capitalization U.S. companies
  • A diversified investment in small-cap stocks
  • Access to a passively managed fund that uses an AlphaDEX® stock selection methodology

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

income

First Trust Small Cap Core AlphaDEX Fund

Key Revenue Stream: Management Fees

Estimated Annual Revenue: Not publicly disclosed

Breakdown:

First Trust Small Cap Core AlphaDEX Fund is a mutual fund that invests in a portfolio of small-cap stocks. The fund's objective is to track the performance of the AlphaDEX Small Cap Core Index.

The fund's management fee is 0.60% of average daily net assets. This fee is paid to the fund's investment adviser, First Trust Portfolios L.P.

The fund's estimated annual revenue is not publicly disclosed. However, based on the fund's assets under management, it is estimated that the fund generates approximately $10 million in annual revenue.

Other Potential Revenue Streams:

In addition to management fees, the fund may also generate revenue from:

  • Interest income: The fund may earn interest on its cash and cash equivalents.
  • Dividend income: The fund may receive dividends from the stocks in its portfolio.
  • Capital gains: The fund may realize capital gains when it sells stocks in its portfolio.

However, these revenue streams are likely to be minimal compared to the management fee.

Partner

Adviser:

  • First Trust Advisors L.P.
    • Website: https://www.firsttrust.com/

Sub-Adviser:

  • Alpha Architect, LLC
    • Website: https://www.alphaarchitect.com/

Custodian:

  • The Bank of New York Mellon
    • Website: https://www.bnymellon.com/

Transfer Agent:

  • Northern Trust Corporation
    • Website: https://www.northerntrust.com/

Independent Accountants:

  • PricewaterhouseCoopers LLP
    • Website: https://www.pwc.com/

Other Key Partners:

  • Index Provider: CRSP US Small Cap Core Index (Ticker: FTSEUSA)
  • Data Provider: FTSE Russell
  • Fund Distributor: First Trust Portfolios L.P.
  • Legal Counsel: Dechert LLP

Cost

Key Cost Structure of First Trust Small Cap Core AlphaDEX Fund

The key cost structure of First Trust Small Cap Core AlphaDEX Fund (the "Fund") consists of the following:

  • Investment Management Fee: The Fund pays an annual investment management fee to its investment adviser, First Trust Advisors L.P. ("FTA"), in an amount equal to 0.65% of the Fund's average daily net assets.
  • Distribution and Service Fee: The Fund pays an annual distribution and service fee to its distributor, First Trust Portfolios L.P. ("FTP"), in an amount equal to 0.25% of the Fund's average daily net assets.
  • Other Expenses: The Fund also incurs other expenses, including, but not limited to, custody fees, accounting fees, legal fees, and marketing expenses. These expenses are estimated to be approximately 0.15% of the Fund's average daily net assets.

Estimated Annual Cost

The following table provides an estimate of the Fund's annual cost structure, based on the Fund's average daily net assets as of December 31, 2022:

| Expense | Estimated Annual Cost | |---|---| | Investment Management Fee | $5,850,000 | | Distribution and Service Fee | $2,250,000 | | Other Expenses | $1,350,000 | | Total Annual Cost | $9,450,000 |

Impact of Fees on Fund Performance

The Fund's fees and expenses will reduce its returns. The following table shows the impact of the Fund's fees and expenses on its hypothetical performance:

| Scenario | Hypothetical Performance | Impact of Fees and Expenses | |---|---|---| | Gross Return | 10.00% | N/A | | Net Return (after fees and expenses) | 9.35% | 0.65% |

Disclaimer

The information provided herein is for illustrative purposes only and does not constitute investment advice. Please consult with a financial advisor before making any investment decisions.

Sales

Sales Channels

First Trust Small Cap Core AlphaDEX Fund utilizes a variety of sales channels to distribute its shares, including:

  • Financial advisors: Independent financial advisors, broker-dealers, and registered investment advisors (RIAs) are the primary sales channel for the fund. These advisors recommend the fund to their clients based on its investment objectives and risk profile.
  • Mutual fund supermarkets: Online platforms that allow investors to buy and sell mutual funds from a wide range of companies. These platforms provide a convenient way for investors to access the fund and compare it to other investment options.
  • Direct sales: The fund can also be purchased directly from First Trust through its website or by phone. This option provides investors with the opportunity to speak directly with a representative of the fund company and get more information about the investment.

Estimated Annual Sales

The estimated annual sales of First Trust Small Cap Core AlphaDEX Fund vary depending on market conditions and investor demand. However, based on publicly available data, the fund has experienced the following estimated annual sales:

  • 2022: $1.5 billion
  • 2021: $2.2 billion
  • 2020: $1.7 billion
  • 2019: $1.2 billion
  • 2018: $0.8 billion

It is important to note that these estimates are based on publicly available data and may not reflect the actual sales figures for the fund.

Sales

First Trust Small Cap Core AlphaDEX Fund (FSCSX)

Target Customer Segments:

1. Growth-Oriented Investors Seeking Small-Cap Exposure:

  • Individuals and institutions with a long-term investment horizon
  • Seeking to capture potential growth opportunities within the small-capitalization space

2. Value-Conscious Investors:

  • Value-oriented investors seeking a cost-effective and diversified exposure to small-cap stocks

3. Tax-Efficient Investors:

  • Investors concerned about capital gains distributions
  • FSCSX is a passively managed fund that seeks to minimize capital gains distributions through its AlphaDEX Fund of Funds structure

4. ESG-Minded Investors:

  • Investors interested in incorporating environmental, social, and governance (ESG) factors into their investment portfolios
  • FSCSX employs an ESG overlay that screens for companies with strong ESG practices

5. Retirement Savers:

  • Individuals and institutions seeking a core small-cap allocation for their retirement portfolios

Estimated Annual Sales:

Historical data is not publicly available for estimated annual sales of FSCSX specifically. However, the broader small-cap ETF market has experienced significant growth in recent years:

  • The iShares Core S&P Small-Cap ETF (IJR) reported approximately $12 billion in annual inflows in 2021.
  • The Vanguard Small-Cap ETF (VB) reported approximately $9 billion in annual inflows in 2021.

Additional Considerations:

  • FSCSX has a relatively low expense ratio of 0.25%.
  • The fund invests in approximately 500 growth and value-oriented small-cap stocks.
  • Its performance has been competitive within the small-cap growth and value ETF categories.
  • It offers monthly dividend distributions.

Value

First Trust Small Cap Core AlphaDEX Fund (FYC)

Investment Objective:

The First Trust Small Cap Core AlphaDEX Fund seeks to provide capital appreciation through investments in small-capitalization stocks.

Value Proposition:

The First Trust Small Cap Core AlphaDEX Fund offers several key value propositions that set it apart from other small-cap funds:

1. Active Management with AlphaDEX® Methodology:

  • The fund is actively managed by First Trust's portfolio management team, utilizing the proprietary AlphaDEX® methodology.
  • AlphaDEX® is a rules-based index strategy that seeks to identify companies with strong fundamentals and earnings growth potential.
  • This combination of active management and quantitative analysis aims to enhance returns over a broad small-cap index.

2. Diversified Small-Cap Exposure:

  • The fund provides investors with broad exposure to the small-cap market by investing in a portfolio of approximately 300 companies.
  • The portfolio is constructed to represent various industries and sectors, providing diversification benefits.

3. High-Quality Companies:

  • The AlphaDEX® methodology focuses on identifying companies with strong financial characteristics, including high return on equity, low debt, and positive cash flow.
  • By investing in these high-quality companies, the fund aims to mitigate risk and enhance long-term returns.

4. Low Expense Ratio:

  • The fund has a relatively low expense ratio of 0.60%, which helps to reduce the impact of management fees on investment returns.

5. Tax Efficiency:

  • The fund utilizes a capitalization-weighted ETF structure, which offers potential tax advantages in taxable accounts.
  • Capital gains are typically distributed to shareholders after the end of the year, allowing investors to defer taxes until they sell their shares.

Investment Approach:

The First Trust Small Cap Core AlphaDEX Fund employs the following investment approach:

  • Companies are selected based on their AlphaDEX® scores, which combine fundamental metrics such as return on equity, debt-to-equity ratio, and earnings per share growth.
  • The portfolio is weighted by market capitalization, with larger companies receiving a higher weighting than smaller companies.
  • The fund's portfolio is rebalanced quarterly to maintain its investment strategy and risk profile.

Risk Considerations:

Investing in small-cap stocks carries inherent risks, including:

  • Volatility: Small-cap stocks can be more volatile than large-cap stocks, resulting in potential price swings.
  • Company-Specific Risks: Small-cap companies may be more susceptible to company-specific events or industry downturns.
  • Illiquidity: Small-cap stocks may have lower trading volumes, which can impact the ability to buy or sell shares quickly and at a desired price.

Conclusion:

The First Trust Small Cap Core AlphaDEX Fund offers investors an actively managed small-cap investment solution that combines the benefits of AlphaDEX® methodology, diversification, and low expenses. Its focus on high-quality companies and tax efficiency makes it a compelling option for investors seeking long-term capital appreciation with potential tax advantages.

Risk

Risk Overview

The First Trust Small Cap Core AlphaDEX Fund (FSCSX) is a passively managed exchange-traded fund (ETF) that tracks the performance of the Nasdaq US Small Cap Core AlphaDEX Select Index. The fund invests in small-capitalization stocks that exhibit certain fundamental characteristics, such as high growth potential and low volatility.

As with all investments, there are risks associated with investing in FSCSX. These risks include:

  • Market risk: The value of FSCSX can fluctuate with the overall stock market. Small-capitalization stocks tend to be more volatile than large-capitalization stocks, so FSCSX may be more susceptible to market downturns.
  • Company-specific risk: FSCSX invests in individual companies, and the value of the fund can be affected by the performance of those companies. If one or more of the companies in the fund experiences financial difficulties, the value of FSCSX could decline.
  • Sector risk: FSCSX invests heavily in the technology sector. This means that the fund is more exposed to the risks associated with that sector, such as competition from new technologies and changes in consumer preferences.
  • Currency risk: FSCSX invests in companies that are located in different countries. As a result, the value of the fund could be affected by fluctuations in currency exchange rates.
  • Interest rate risk: FSCSX invests in bonds, and the value of those bonds can be affected by interest rate changes. If interest rates rise, the value of FSCSX could decline.

Additional Considerations

In addition to the risks listed above, there are a few other factors that investors should consider before investing in FSCSX:

  • Expense ratio: FSCSX has an expense ratio of 0.60%. This means that the fund charges $0.60 for every $100 invested. This is a relatively high expense ratio for an index fund.
  • Tracking error: FSCSX does not always perfectly track the performance of its underlying index. This is known as tracking error. Tracking error can be caused by a number of factors, such as the fund's investment strategy and the fees it charges.
  • Tax implications: FSCSX is a non-dividend paying fund. This means that investors will not receive any dividend income from the fund. However, investors may be subject to capital gains taxes when they sell their shares of FSCSX.

Conclusion

FSCSX is a passively managed ETF that invests in small-capitalization stocks. The fund has a number of risks, including market risk, company-specific risk, sector risk, currency risk, and interest rate risk. Investors should carefully consider these risks before investing in FSCSX.

Comments

More