The Nasdaq AlphaDEX® Indexes

Designed to objectively identify stocks that exhibit growth factors with the greatest potential for capital appreciation

This Solution Helps

  • Asset Managers
  • Financial Advisors
  • RIAs
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The Nasdaq AlphaDEX® Indexes use a proprietary, rules-based methodology designed to produce similar correlation and risk characteristics as broad market indexes while seeking outperformance. By utilizing various stock selections and weighting criteria based on growth and value factors, the Indexes offer unique smart beta characteristics for investors.

The Nasdaq AlphaDEX family currently consists of Eurozone, U.S. Total Market, Emerging Market Small Cap and Developed Market Ex-U.S. Small Cap Indexes.

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AlphaDEX Methodology

Since launched by First Trust Portfolios in 2007, the AlphaDEX methodology and the products that track it have gathered continuous investor interest due to its strategic approach to enhanced passive index investing.

  • Growth & Value

    Based on style designations, determine each stock's selection score. Stocks designated as core or blend receive the better of their growth or value score.

  • Score

    Based on style designations, determine each stock's selection score. Stocks designated as core or blend receive the better of their growth or value score.

  • Elimination

    Rank all stocks by their final selection score and eliminate from consideration the lowest 25 %.

  • Rank

    Place the remaining stocks into quintiles based on their selection score rank. The top quintile stocks get a total weight of 5/15ths, the second quintile stocks get a total weight of 1/15ths, etc. Each stock is equally weighted within its quintile.

  • Evaluate

    Repeat the process quarterly, rebalancing and reconstituting the index.

Key Benefits

Strict Methodology

In order to stay true to the mandate of each category to which the AlphaDEX methodology is applied, and to avoid style-drift, the universe from which potential holdings are selected is established from well-known benchmark indices.

Value Model

The AlphaDEX “value” model scores stocks on three separate factors: price-to-book ratio, price-to-cash flow ratio, and return on assets

Growth Model

The AlphaDEX growth model scores stocks based on five separate factors: three-month price appreciation, six-month price appreciation, twelve-month price appreciation, one-year sales growth, and price-to-sales ratio.

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Resource Center

  • Ebook: Guide to Smart Beta Strategies

    Ebook: Guide to Smart Beta Strategies

    Ebook: Guide to Smart Beta Strategies

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