First Trust Eurozone AlphaDEX® UCITS ETF
| Issuer: First Trust |
| Asset Class: Equity |
| TER: 65bps |
| Trading Currency: GBX |
| Pays Income: False |
| Listing Date: 22 Aug 2018 |
| Ticker: FEUD |
| ISIN: IE00BF2FL590 |
This fund offers a strategic approach to investing in Eurozone equities by tracking a rules-based, quantitative index. It deviates from traditional market-cap weighting by employing the AlphaDEX methodology, which selects and weights stocks based on a combination of growth and value factors. This strategy aims to identify companies with superior fundamental characteristics that may offer higher return potential compared to the broader market. The selection universe consists of liquid equities from developed Eurozone countries, ensuring a focus on established markets within the region.
The investment process involves a systematic ranking of stocks based on specific criteria. For growth, metrics such as three, six, and twelve-month price appreciation, sales-to-price ratio, and one-year sales growth are considered. For value, factors like book value-to-price, cash flow-to-price, and return-on-assets are analyzed. The top-ranked stocks from this combined scoring system are included in the underlying index and weighted according to their scores, not their market capitalization. This method seeks to mitigate the concentration risk inherent in market-cap indices and to systematically tilt the portfolio towards stocks with favorable factor exposures.
For investors, this product can serve as a core or tactical holding to gain exposure to the Eurozone with a smart-beta overlay. It is suitable for those who believe that a factor-based approach can lead to long-term outperformance over passive, market-cap-weighted strategies. By focusing on a transparent, non-discretionary methodology, the fund provides a disciplined way to access the potential for enhanced returns within the European equity landscape. As an accumulating share class, all dividend income is automatically reinvested, which can be beneficial for long-term capital growth through compounding.
