First Trust Asia Pacific ex-Japan AlphaDEX Fund (FPA) seeks to track the NASDAQ AlphaDEX Asia Pacific ex-Japan Index, which selects and weights stocks from developed and emerging Asian markets excluding Japan based on growth and value factors rather than market capitalization.
How It Works
FPA uses First Trust's proprietary AlphaDEX methodology that ranks stocks across multiple growth and value metrics including sales growth, return on assets, and price-to-book ratios. The fund equally weights selected stocks within each country allocation, rebalancing quarterly to maintain factor exposures. This active indexing approach targets approximately 75-100 holdings across countries like Australia, South Korea, Taiwan, Hong Kong, Singapore, and India, providing broad Asia Pacific exposure with factor tilts.
Key Features
- AlphaDEX factor methodology targets stocks with superior growth and value characteristics versus traditional cap-weighted Asia Pacific ETFs
- Equal weighting within countries reduces concentration risk from mega-cap stocks that dominate traditional regional indexes
- Covers both developed markets like Australia and emerging markets like India in single fund structure
Risks
- This ETF can lose significant value during Asian market downturns, potentially declining 40-50% during regional crises or global risk-off periods
- Currency fluctuations against the U.S. dollar can substantially impact returns as the fund holds unhedged foreign currency positions
- Factor methodology may underperform during periods when growth or value factors fall out of favor in Asian markets
Who Should Own This
Best suited as a satellite holding (5-15% of equity allocation) for investors with high risk tolerance and 5+ year time horizons seeking diversified Asia Pacific exposure with factor enhancement. Appropriate for investors wanting regional diversification beyond U.S. and European markets while accepting emerging market volatility.