First Trust Revamps AlphaDex ETF

April 18, 2018

First Trust has made major changes to the Taiwan ETF included in its family of AlphaDex ETFs. The First Trust Taiwan AlphaDEX Fund (FTW) has changed its name and ticker to the First Trust India NIFTY 50 Equal Weight ETF (NFTY).

The fund has kept its expense ratio of 0.80%.

The First Trust family of AlphaDex ETFs includes 40 funds and more than $16 billion in assets under management (AUM). FTW was one of the smallest funds in the family, with roughly $2 million in AUM, so it’s not surprising it got a makeover and a complete change in focus.

Additionally, India is one of the largest and most populated emerging markets, and is expected to grow at a rapid rate in the coming years. The outlook for Taiwan is positive, but significantly less dramatic. Plus, the nation is much smaller in terms of market capitalization. And First Trust did not have an India-focused ETF on its roster, which, given the breadth of its lineup and the global importance of India, was a bit of a glaring omission.

Methodologies

The AlphaDex methodology applies a smart-beta approach to various markets, and the family of ETFs includes countries, regions, sectors, size segments and styles. Companies are evaluated using a quantitative model that looks at growth and value characteristics to determine their likelihood of outperformance or underperformance. The universe is broken up into tiers based on companies’ scores, with each tier assigned a weight, and the companies within each one weighted equally.

The new NFTY is also a smart-beta fund, but its methodology is much simpler—a simple equal-weight approach as captured by the NIFTY 50 Equal Weight Index. The fund is the fourth ETF to cover the broad India market, with the largest one being the $5.4 billion iShares MSCI India ETF (INDA).

Contact Heather Bell at [email protected]

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