First Trust Emerging Markets Small Cap AlphaDEX Fund (NASDAQ: FEMS)

Latest news for First Trust Emerging Markets Small Cap AlphaDEX Fund (NASDAQ:FEMS)

First Trust Emerging Markets Small Cap AlphaDEX Fund

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The fund will normally invest at least 90% of its net assets (including investment borrowings) in the common stocks, depositary receipts, real estate investment trusts (REITs) and preferred shares that comprise the index. The index is designed to select stocks from the NASDAQ Emerging Markets Index (the base index) that may generate positive alpha, or risk-adjusted returns, relative to traditional indices through the use of the AlphaDEX selection methodology.

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Guggenheim International Small Cap LDRs ETF

XOIL

ETF Stats for February 2012: 2nd Highest Launch Count On Record

Sick of hearing about U.S. small caps and the relevant exchange-traded funds lagging their large-cap counterparts? It is understandable if investors feel that way, but it is concerning that the Russell 2000 Index fell 1.2 percent last week while the S&amp;P 500 nudged modestly higher.
As has been widely documented through 2017, international small-cap ETFs have been much better bets than their U.S. equivalents. That includes emerging markets small-cap ETFs. An asset class that is believed to be exceptionally volatile is delivering in significant fashion for investors. Just look at the First Trust Emerging Markets Small Cap AlphaDEX Fund (NASDAQ: <a class="ticker" href="/stock/fems#NASDAQ">FEMS</a>).
FEMS is up 32.1 percent year to date, meaning the 2017 gains offered by the Russell 2000 Index and the S&amp;P SmallCap 600 Index could be combined then multiplied by five and still not exceed the returns offered by FEMS this year.
<h3>What&#39;s In The FEMS Mix</h3>
FEMS follows the NASDAQ AlphaDEX Emerging Markets Small Cap Index, which is a smart beta approach to smaller emerging markets equities. The ETF turned 5 years old earlier this year.
&ldquo;To construct the Index, Nasdaq ranks the eligible stocks on growth factors including 3-, 6- and 12- month price appreciation, sales to price and one year sales growth, and separately on value factors including book value to price, cash flow to price and return on assets,&rdquo; according to <a href="http://www.ftportfolios.com/Retail/Etf/EtfSummary.aspx?Ticker=FEMS">First Trust</a>. &ldquo;All stocks are ranked on the sum of ranks for the growth factors and, separately, all stocks are ranked on the sum of ranks for the value factors. A stock must have data for all growth and/or value factors to receive a rank for that style.&rdquo;
Data suggest the FEMS methodology works. Since coming to market in February 2012, FEMS has returned 6.3 percent. While that is not spectacular, it does outpace the 2.8 percent returned by the MSCI Emerging Market Small-Cap Index over the same period.
<h3>Countries And Sectors</h3>
FEMS holds 205 stocks. At the geographic level, the ETF allocates nearly 30 percent of its weight to Taiwan, historically one of the least volatile emerging markets. China and Brazil combine for a quarter of the ETF&#39;s weight. Overall, small caps from 10 countries are found in FEMS.
FEMS is benefiting from the stellar performance of emerging markets technology names this year as that sector is over 20 percent of the ETF&#39;s weight. As a small-cap ETF, FEMS is likely to avoid state-controlled companies as highlighted by a mere 10-percent combined weight to the energy and financial services sectors.
Materials and real estate names combine nearly 31 percent of the ETF&#39;s roster while FEMS&#39;s consumer exposure is merely adequate at 14.6 percent.
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/08/9878484/a-view-on-the-vietnam-etf">Visiting The Vietnam ETF</a>
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/08/9878483/a-stunning-view-of-a-popular-tech-etf">Underweight XLK</a>

Somewhat hidden among the blistering pace of new ETF introductions this year is the proliferation of <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/01/2258235/trio-of-emerging-markets-small-cap-etfs-debut-today">international small-cap funds</a>. The race to roll out more global small-cap ETFs has even prompted some ETF sponsors to try their luck with <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/03/2390987/checking-in-success-where-others-failed-ewhs-ewh-fxi">concepts that previously failed</a>.

It's easy to understand why ETF issuers want to get these funds out to investors: Many have proven popular. Plenty of country-specific small-cap funds have been embraced by investors and the multi-country SPDR S&amp;P Emerging Markets Small Cap ETF (NYSE: <a class="ticker" href="/stock/ewx#NYSE">EWX</a>) has over $913 million in assets under management, indicating there might be room for a new challenger such as the First Trust Emerging Markets Small Cap AlphaDEX Index Fund (NYSE: <a class="ticker" href="/stock/fems#NYSE">FEMS</a>).

FEMS, which tracks the Defined Emerging Markets Small Cap Index, isn't even a month old yet and the ETF enters an arena with plenty of competition. In addition to EWX, there's the WisdomTree Emerging Markets SmallCap Dividend ETF (NYSE: <a class="ticker" href="/stock/dgs#NYSE">DGS</a>) and the iShares MSCI Emerging Markets Small Cap Index Fund (NYSE: EEMS).

Even with the potential for multiple rivalries, FEMS is off a decent start with over $3 million in AUM. Diversity nuts will love this fund as FEMS is home to almost 200 stocks and five sectors – materials, industrials, technology, consumer discretionary and financials – receive double-digit allocations. Those sector weights range from 15.49% for financials to 18.17% for materials and no single stock receives a weight above 1.21%.

At the sector level FEMS certainly offers better diversity than its iShares counterpart and is at the very least comparable to its SPDR equivalent. 

Regarding country exposure, without knowing what "other" is defined as, FEMS offers exposure to 10 countries. At the bottom, Russia receives an allocation of less than 2%. The word of caution on this note is that China and Taiwan combine for over 43% of FEMS' country weight.

It's surprising that Brazil and Russia combine for less than 6% of this ETF's weight considering they are huge economies and there are small-cap ETFs exclusively devoted to the duo, the Market Vectors Brazil Small-Cap ETF (NYSE: <a class="ticker" href="/stock/brf#NYSE">BRF</a>) and the Market Vectors Russia Small-Cap ETF (NYSE: <a class="ticker" href="/stock/rsxj#NYSE">RSXJ</a>). India is also no where to be found in this ETF.

We like the fact that FEMS' third-largest country weight is Thailand, but going forward, the ETF might be better served reducing its Taiwan exposure and redistributing it among Brazil, Indonesia, Russia and Thailand. Just our suggestion and if Taiwan loses its emerging markets status this year, FEMS will probably remove the country from its lineup anyway. That could make the new ETF even more intriguing.

Sick of hearing about U.S. small caps and the relevant exchange-traded funds lagging their large-cap counterparts? It is understandable if investors feel that way, but it is concerning that the Russell 2000 Index fell 1.2 percent last week while the S&amp;P 500 nudged modestly higher.
As has been widely documented through 2017, international small-cap ETFs have been much better bets than their U.S. equivalents. That includes emerging markets small-cap ETFs. An asset class that is believed to be exceptionally volatile is delivering in significant fashion for investors. Just look at the First Trust Emerging Markets Small Cap AlphaDEX Fund (NASDAQ:<a class="ticker" href="/stock/FEMS#NASDAQ">FEMS</a>).
FEMS is up 32.1 percent year to date, meaning the 2017 gains offered by the Russell 2000 Index and the S&amp;P SmallCap 600 Index could be combined then multiplied by five and still not exceed the returns offered by FEMS this year.
<h3>What&#39;s In The FEMS Mix</h3>
FEMS follows the NASDAQ AlphaDEX Emerging Markets Small Cap Index, which is a smart beta approach to smaller emerging markets equities. The ETF turned 5 years old earlier this year.
&ldquo;To construct the Index, Nasdaq ranks the eligible stocks on growth factors including 3-, 6- and 12- month price appreciation, sales to price and one year sales growth, and separately on value factors including book value to price, cash flow to price and return on assets,&rdquo; according to <a href="http://www.ftportfolios.com/Retail/Etf/EtfSummary.aspx?Ticker=FEMS">First Trust</a>. &ldquo;All stocks are ranked on the sum of ranks for the growth factors and, separately, all stocks are ranked on the sum of ranks for the value factors. A stock must have data for all growth and/or value factors to receive a rank for that style.&rdquo;
Data suggest the FEMS methodology works. Since coming to market in February 2012, FEMS has returned 6.3 percent. While that is not spectacular, it does outpace the 2.8 percent returned by the MSCI Emerging Market Small-Cap Index over the same period.
<h3>Countries And Sectors</h3>
FEMS holds 205 stocks. At the geographic level, the ETF allocates nearly 30 percent of its weight to Taiwan, historically one of the least volatile emerging markets. China and Brazil combine for a quarter of the ETF&#39;s weight. Overall, small caps from 10 countries are found in FEMS.
FEMS is benefiting from the stellar performance of emerging markets technology names this year as that sector is over 20 percent of the ETF&#39;s weight. As a small-cap ETF, FEMS is likely to avoid state-controlled companies as highlighted by a mere 10-percent combined weight to the energy and financial services sectors.
Materials and real estate names combine nearly 31 percent of the ETF&#39;s roster while FEMS&#39;s consumer exposure is merely adequate at 14.6 percent.
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/08/9878484/a-view-on-the-vietnam-etf">Visiting The Vietnam ETF</a>
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/08/9878483/a-stunning-view-of-a-popular-tech-etf">Underweight XLK</a>

Somewhat hidden among the blistering pace of new ETF introductions this year is the proliferation of <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/01/2258235/trio-of-emerging-markets-small-cap-etfs-debut-today">international small-cap funds</a>. The race to roll out more global small-cap ETFs has even prompted some ETF sponsors to try their luck with <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/03/2390987/checking-in-success-where-others-failed-ewhs-ewh-fxi">concepts that previously failed</a>.

It's easy to understand why ETF issuers want to get these funds out to investors: Many have proven popular. Plenty of country-specific small-cap funds have been embraced by investors and the multi-country SPDR S&P Emerging Markets Small Cap ETF (NYSE: <a class="ticker" href="/stock/ewx#NYSE">EWX</a>) has over $913 million in assets under management, indicating there might be room for a new challenger such as the First Trust Emerging Markets Small Cap AlphaDEX Index Fund (NYSE: <a class="ticker" href="/stock/fems#NYSE">FEMS</a>).

FEMS, which tracks the Defined Emerging Markets Small Cap Index, isn't even a month old yet and the ETF enters an arena with plenty of competition. In addition to EWX, there's the WisdomTree Emerging Markets SmallCap Dividend ETF (NYSE: <a class="ticker" href="/stock/dgs#NYSE">DGS</a>) and the iShares MSCI Emerging Markets Small Cap Index Fund (NYSE: EEMS).

Even with the potential for multiple rivalries, FEMS is off a decent start with over $3 million in AUM. Diversity nuts will love this fund as FEMS is home to almost 200 stocks and five sectors – materials, industrials, technology, consumer discretionary and financials – receive double-digit allocations. Those sector weights range from 15.49% for financials to 18.17% for materials and no single stock receives a weight above 1.21%.

At the sector level FEMS certainly offers better diversity than its iShares counterpart and is at the very least comparable to its SPDR equivalent. 

Regarding country exposure, without knowing what "other" is defined as, FEMS offers exposure to 10 countries. At the bottom, Russia receives an allocation of less than 2%. The word of caution on this note is that China and Taiwan combine for over 43% of FEMS' country weight.

It's surprising that Brazil and Russia combine for less than 6% of this ETF's weight considering they are huge economies and there are small-cap ETFs exclusively devoted to the duo, the Market Vectors Brazil Small-Cap ETF (NYSE: <a class="ticker" href="/stock/brf#NYSE">BRF</a>) and the Market Vectors Russia Small-Cap ETF (NYSE: <a class="ticker" href="/stock/rsxj#NYSE">RSXJ</a>). India is also no where to be found in this ETF.

We like the fact that FEMS' third-largest country weight is Thailand, but going forward, the ETF might be better served reducing its Taiwan exposure and redistributing it among Brazil, Indonesia, Russia and Thailand. Just our suggestion and if Taiwan loses its emerging markets status this year, FEMS will probably remove the country from its lineup anyway. That could make the new ETF even more intriguing.

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