First Trust Eurozone AlphaDEX ETF passes €100m milestone

Nov 17th, 2017 | By | Category: Equities

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The First Trust Eurozone AlphaDEX UCITS ETF (FEUZ LN) has grown to over €100 million in assets under management three years after its initial launch. The ETF, which provides smart beta exposure to eurozone stocks with growth and value characteristics, has also been awarded a coveted five-star Morningstar Rating based on a risk- and cost-adjusted analysis of fund performance compared to similar eurozone large-cap equity funds.

Derek Fulton, CEO at First Trust Global Portfolios

Derek Fulton, CEO at First Trust Global Portfolios.

Derek Fulton, CEO at First Trust Global Portfolios, commented: “We are delighted investors are embracing our AlphaDEX methodology and that the strong performance of this strategy has been acknowledged by Morningstar with a five-star rating.”

FEUZ tracks the NASDAQ AlphaDEX Eurozone Index which selects companies based on value factors such as price-to-book ratio, price-to-cash flow ratio, and return on capital; and on growth factors such as momentum, revenue growth and price-to-sales ratio.

The top 150 stocks, ranked according to a combined score across all value and growth factors, are selected for inclusion in the index. A modified equal-weighting scheme is used to prevent over concentration in individual firms while tilting in favour of companies with a high AlphaDEX factor score. Country and sector weighting constraints are also applied to further enhance diversification. The index is reconstituted and rebalanced semi-annually.

Morningstar’s five-star rating is awarded to the top 10% of funds within their respective categories, based on risk- and cost-adjusted performance, with at least a three-year performance history. This means the more expensive the fund is, the harder it will be for the fund to earn a high star rating.

While FEUZ derives its rating entirely from its three-year performance, other funds which have been in existence for longer derive their scores from a weighted average of their performance across three-, five-, and ten-year periods.

Eurozone stocks have enjoyed a bullish run over the past three years – the benchmark MSCI EMU Index is up 15.9% year-to-date and 10.8% per annum over the past three years. Despite this strong performance, FEUZ has outshined over both time frames, gaining 20.3% YTD and 15.9% per annum over the past three years (data as of 31 October 2017).

Fulton continued: “The fund uses a combination of value and momentum, is agnostic when it comes to market cap size and is ranked in the top decile of its Morningstar category over the past three years. We believe this demonstrates the true flexibility of the ETF structure to deliver alpha for investors.”

FEUZ is offered with a total expense ratio (TER) of 0.65% and is available to trade in US dollars, euros, or pounds sterling.

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