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Make Money in Undervalued Large-Cap Stocks the Easy Way

http://www.fool.com/investing/etf/2011/12/15/make-money-in-undervalued-large-cap-stocks-the-ea.aspx

Selena Maranjian
December 15, 2011

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect seemingly undervalued large-cap companies to prosper as their intrinsic value is eventually realized and as they grow even bigger over time, then the First Trust Large Cap Value AlphaDEX ETF (NYSE: FTA  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The First Trust ETF's expense ratio -- its annual fee -- is 0.70%, which is a bit higher than many ETFs, but still lower than the typical stock mutual fund.

This ETF has performed reasonably well, beating the S&P 500, on average, over the past three years. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

What's in it?
Several of this ETF's components made strong contributions to its performance over the past year. Intel (Nasdaq: INTC  ) , up 15% this year, is maintaining its chip dominance and benefiting from growing PC demand in emerging markets and strong demand for servers, as well.

Other companies didn't add as much to the ETF's returns last year, but could have an effect in the years to come. Xerox (NYSE: