ETF Education Report: FIRST TRUST ASIA PACIFIC EX-JAPAN ALPHADEX FUND (FPA)

What this ETF is trying to do

The FIRST TRUST ASIA PACIFIC EX-JAPAN ALPHADEX FUND (FPA) is an exchange-traded fund (ETF) that trades on the NASDAQ. While specific holdings are not listed in this report, the name suggests it focuses on companies located in the Asia Pacific region, excluding Japan.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return and total return.

• Price Return: This measures only how much the share price has changed.

• Total Return: This includes both the change in share price *and* any cash distributions (dividends) paid out to investors.

For FPA, the numbers show growth over different time periods:

• Year-to-Date (YTD): The price return is approximately 31.55%, while the total return is approximately 33.21%.

• One Year: The price return is approximately 28.66%, while the total return is approximately 34.58%.

• Three Years: The price return is approximately 85.17%, while the total return is approximately 106.81%.

To visualize the price change, an investor could look at the estimated prices. The current price is $49.16. Roughly one year ago, the estimated price was approximately $38.21.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. FPA has a distribution yield of approximately 3.65%. This means the cash paid out is about 3.65% of the ETF's price. These distributions usually happen quarterly, and over the last 12 months, there were four payouts. The trailing distributions were approximately $1.79 per share.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases significantly. It is important to note that a falling share price does not always mean NAV erosion is happening.

In the case of FPA, the erosion-risk score is 100, which is labeled as "No price erosion detected." The erosion severity is rated as "good," and there is no severe erosion-risk flag.

Pros

• The ETF has shown positive price returns and total returns over the one-year and three-year periods.

• It provides a distribution yield of approximately 3.65%.

Cons

• The specific top holdings are not provided in this data set, so the exact companies owned by the fund cannot be reviewed here.

Beginner takeaway

When studying FPA, remember that total return is the most complete way to see how the fund performed because it includes both price changes and cash payments. While this ETF provides a distribution yield, high yields alone do not tell the whole story; you should always look at the total return and the price stability together.