First Trust launches ETF range for UK market

First Trust Advisors is planning to open up its $4.6bn enhanced index fund range to the UK market, taking on the likes of BlackRock and Vanguard in the ETF space.

The group is planning to launch a handful of its 39-strong AlphaDEX exchange traded funds (ETFs) under UCITS IV at the end of the first quarter, subject to regulatory approval.

Unlike a traditional ETF, First Trust’s enhanced index funds do not track an index by a company’s market cap size. Instead, stocks are ranked according to value and growth factors.

Dan Lindquist, managing director of First Trust, said the AlphaDEX range offers investors the opportunity to outperform stock markets.

“We believe this is the optimal time to expand the range outside of the United States because of the strong opportunities AlphaDEX provides for investors that typically have only had access to market cap weighted ETFs in Europe,” he said.

The firm launched its first AlphaDEX exchange traded fund into the US market in 2007.

Its range of products tracks global indices, including the FTSE 100, S&P 500 and the Hang Seng. It also tracks sectors indices, including financials, energy and materials.

The fund range will have an AMC 0.85%, notably higher than the average ETF price of 0.5%.

Eric Anderson, vice president for First Trust, agues the higher fees can be justified by the products’ performance.

“Our AlphaDEX exchange traded funds with a five-year track record have delivered 180 basis points of outperformance after fees are taken into account,” he said.

“The fees are a little bit on the expensive side, but are a lot cheaper than the average mutual fund.”


This article was first published on Investment Week

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