First Trust Global Portfolios, a leading provider of exchange-traded funds, has announced the launch of a new global equities ETF, the First Trust Global AlphaDEX UCITS ETF (FGBL), based on the popular “AlphaDEX” smart beta methodology.
The new ETF follows a multi-factor smart beta methodology to provide access to a portfolio of global value and growth stocks.
The fund, which is linked to the Nasdaq AlphaDEX Global Index, has been listed on the London Stock Exchange in GBP and on Euronext Paris in EUR.
Commenting on the launch, Derek Fulton, CEO of First Trust Global Portfolios, said: “We are delighted to bring to market in Europe the First Trust Global AlphaDEX UCITS ETF. With this launch, investors now have a single ticker solution to investing globally using the proven AlphaDEX multi-factor methodology.”
The Nasdaq AlphaDEX indices use a proprietary, rules-based methodology designed to produce similar correlation and risk characteristics as broad market indexes while seeking outperformance. By utilizing various stock selections and weighting criteria based on growth and value factors, the indcies offer unique smart beta characteristics for investors. There are currently 126 indices in the family.
The methodology uses two pillars, fundamental value and growth factors, to select stocks based on their potential for long-term capital gains.
The value pillar analyses firms based on a combination of their price-to-book ratio, price-to-cash flow ratio, and return on assets, effectively determining whether the stock may be considered cheap relative to fundamental factors, and also providing an indication of the quality of assets on the balance sheet.
The growth pillar scores stocks on five separate metrics: three-month price appreciation, six-month price appreciation, twelve-month price appreciation, one-year sales growth, and the price-to-sales ratio. The aim is to rank stocks according to their price momentum factor as well as provide a measure of fundamental growth.
A modified equal-weighting scheme is used to prevent over concentration in individual firms while tilting in favour of companies that scored impressively according to the AlphaDEX methodology.
Currently there are 497 holdings in the global index. In terms of country weights, the index has significant exposure to the US (32.5%), Japan (24.5%) and the UK (7.1%) while sector exposures currently lean towards consumer discretionary (17.8%), financials (17.5%), industrials (14.7%) and energy (11.1%).
The fund currently has a total expense ratio of 0.70% which will rise to 0.80% on 18 November 2016.
The new fund complements five existing AlphaDEX ETFs offered in Europe:
First Trust US Large Cap Core AlphaDEX UCITS ETF (FEXU LN)
First Trust Japan AlphaDEX UCITS ETF (FJP LN)
First Trust United Kingdom AlphaDEX UCITS ETF (FKU LN)
First Trust Emerging Markets AlphaDEX UCITS ETF (FEM LN)
First Trust Eurozone AlphaDEX UCITS ETF (FEUZ LN)