First Trust Emerging Markets AlphaDEX Fund (FEM) Covered Calls

The First Trust Emerging Markets AlphaDEX Fund is an exchange-traded fund that tracks the NASDAQ AlphaDEX Emerging Markets Index. The fund utilizes a proprietary, rules-based methodology to select and weight stocks from the NASDAQ Emerging Markets Index. By ranking securities based on growth and value factors, the fund aims to identify companies with the potential to outperform traditional market-capitalization-weighted benchmarks.

You can sell covered calls on First Trust Emerging Markets AlphaDEX Fund to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for FEM (prices last updated Tue 4:16 PM ET):

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The First Trust Emerging Markets AlphaDEX Fund (FEM) provides a "smart beta" approach to investing in developing economies. Unlike traditional emerging market funds that weight companies based on their market size, FEM employs the AlphaDEX selection methodology. This quantitative process ranks eligible stocks based on fundamental growth factors (like sales growth and price momentum) and value factors (like book value to price and cash flow to price). The top-scoring stocks are selected and weighted into quintiles, ensuring the portfolio is skewed toward companies with the strongest fundamental scores.

The fund’s strategy often results in a portfolio that looks significantly different from a standard cap-weighted index. It tends to have higher exposure to mid-cap companies and can have significant sector tilts depending on which industries are currently showing the best combinations of value and momentum. The fund is reconstituted and rebalanced quarterly, allowing it to adapt to the rapidly changing economic conditions often found in emerging markets like Brazil, India, Taiwan, and South Korea.

Competition

The emerging markets sector is crowded with various index-based and actively managed products. FEM’s primary competitors with active options chains include the iShares MSCI Emerging Markets ETF and the Vanguard FTSE Emerging Markets ETF, both of which follow a traditional cap-weighted approach. For investors seeking a similar "factor-based" alternative, the WisdomTree Emerging Markets High Dividend Fund and the iShares MSCI Emerging Markets Multifactor ETF offer alternative quantitative strategies.

Strategic Outlook and Innovation

The strategic value of the fund lies in its ability to mitigate the "bubble risk" often associated with market-cap weighting in emerging markets. By focusing on fundamentals rather than just stock price, the fund seeks to avoid overvalued mega-cap companies that may dominate traditional indices. This methodology is particularly relevant in markets where state-owned enterprises or a few massive conglomerates can skew the performance of a broad index, potentially providing a more balanced return profile for long-term investors.

Innovation at First Trust is focused on refining the AlphaDEX engine to better capture the nuances of international reporting standards and varying market structures across the developing world. The management team prioritizes transparent, rules-based execution to provide a repeatable and disciplined investment process. As global investors increasingly look for ways to gain alpha beyond simple beta exposure, the fund’s emphasis on systematic factor selection positions it as a sophisticated tool for navigating the high-growth but volatile landscape of emerging market equities.

Want more examples? FELE Covered Calls | FEMS Covered Calls