First Trust US Large Cap Core AlphaDEX ETF

this is a pure play on the S&P 500 which aims to deliver above average returns compared to other index funds but not concentrating the portfolio to one group of companies.

The US market is notoriously difficult for active managers to outperform; the argument is that it is highly efficient and therefore investors would be better to hold a fund that tracks the index rather than paying for active management.

We were recently introduced to First Trust US Large Cap Core AlphaDEX ETF which is best described as a half-way house between the outperformance of an active fund with the structure of an ETF. At this stage it is very difficult to test the performance of the fund as it was only introduced in the UK in 2013.

However what is interesting about the fund is that it aims to provide performance above a tracker fund through active allocation. In a recent fund review we reviewed the Baillie Gifford American Fund and explained that it had struggled to outperform the index. The ETF was launched in April 2013 and over 12 months returned 12.87% by comparison the index returned 8.07% and Baillie Gifford 7.49%.

We wanted to understand why investors might select this over an active fund or a pure tracker fund.

Fund Facts Morningstar


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