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Is First Trust Mid Cap Value AlphaDEX ETF (FNK) a Strong ETF Right Now?
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The First Trust Mid Cap Value AlphaDEX ETF (FNK - Free Report) made its debut on 04/19/2011, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $207.86 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Value Index.
The NASDAQ AlphaDEX Mid Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Value Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for FNK are 0.70%, which makes it one of the most expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.33%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 28.30% of the portfolio, the fund has heaviest allocation to the Financials sector; Consumer Discretionary and Industrials round out the top three.
Taking into account individual holdings, The Mosaic Company (MOS - Free Report) accounts for about 0.83% of the fund's total assets, followed by Iac/interactivecorp. (IAC - Free Report) and Jefferies Financial Group Inc. (JEF - Free Report) .
The top 10 holdings account for about 7.91% of total assets under management.
Performance and Risk
The ETF has lost about -5.48% and is up roughly 22.72% so far this year and in the past one year (as of 01/28/2022), respectively. FNK has traded between $36.29 and $48.46 during this last 52-week period.
The fund has a beta of 1.40 and standard deviation of 32.28% for the trailing three-year period, which makes FNK a medium risk choice in this particular space. With about 226 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Value AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell MidCap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard MidCap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell MidCap Value ETF has $14.20 billion in assets, Vanguard MidCap Value ETF has $15.21 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Value.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is First Trust Mid Cap Value AlphaDEX ETF (FNK) a Strong ETF Right Now?
The First Trust Mid Cap Value AlphaDEX ETF (FNK - Free Report) made its debut on 04/19/2011, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $207.86 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Value Index.
The NASDAQ AlphaDEX Mid Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Value Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for FNK are 0.70%, which makes it one of the most expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.33%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 28.30% of the portfolio, the fund has heaviest allocation to the Financials sector; Consumer Discretionary and Industrials round out the top three.
Taking into account individual holdings, The Mosaic Company (MOS - Free Report) accounts for about 0.83% of the fund's total assets, followed by Iac/interactivecorp. (IAC - Free Report) and Jefferies Financial Group Inc. (JEF - Free Report) .
The top 10 holdings account for about 7.91% of total assets under management.
Performance and Risk
The ETF has lost about -5.48% and is up roughly 22.72% so far this year and in the past one year (as of 01/28/2022), respectively. FNK has traded between $36.29 and $48.46 during this last 52-week period.
The fund has a beta of 1.40 and standard deviation of 32.28% for the trailing three-year period, which makes FNK a medium risk choice in this particular space. With about 226 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Value AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell MidCap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard MidCap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell MidCap Value ETF has $14.20 billion in assets, Vanguard MidCap Value ETF has $15.21 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Value.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.