First Trust United Kingdom AlphaDEX UCITS ETF
| Issuer: First Trust |
| Asset Class: Equity |
| TER: 65bps |
| Trading Currency: GBX |
| Pays Income: False |
| Listing Date: 18 Apr 2016 |
| Ticker: FKUD |
| ISIN: IE00BD9N0445 |
This fund provides exposure to the UK equity market through a quantitative, rules-based strategy known as AlphaDEX. The investment vehicle aims to outperform traditional market-capitalisation-weighted indices by systematically selecting and weighting stocks based on specific growth and value factors. It begins with the NASDAQ UK Index as its selection universe and applies a proprietary screening methodology to identify companies with the potential for superior risk-adjusted returns. This process is designed to construct a portfolio that exhibits stronger fundamental characteristics than the broader market, offering a distinct alternative to standard passive investments.
The AlphaDEX methodology involves a multi-step process. First, all stocks in the base index are ranked on a series of growth factors (such as price appreciation and sales growth) and value factors (including book value-to-price and cash flow-to-price). These individual scores are then combined into a single, composite score. The top-ranked stocks based on this quantitative assessment are selected for inclusion in the fund. This multi-factor approach ensures a diversified exposure to different investment styles, aiming to deliver consistent performance across various market cycles by avoiding over-concentration in a single factor that may fall out of favour.
This product is well-suited for investors seeking enhanced returns from their UK equity allocation and who are comfortable with a strategy that deviates from the standard market index. By focusing on fundamentally selected stocks rather than simply their market size, the fund attempts to avoid the potential pitfalls of market-cap weighting, such as overexposure to overvalued large-cap names. It can be used as a core holding to gain smarter exposure to the UK market or as a tactical component to complement existing passive, market-cap weighted strategies.
