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Is First Trust Mid Cap Core AlphaDEX ETF (FNX) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust Mid Cap Core AlphaDEX ETF (FNX - Free Report) debuted on 05/08/2007, and offers broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $1.01 billion, this makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. FNX is managed by First Trust Advisors. Before fees and expenses, this particular fund seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Core Index.
The NASDAQ AlphaDEX Mid Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Index.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for FNX are 0.59%, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.99%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FNX, it has heaviest allocation in the Financials sector --about 19.50% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Alcoa Corporation (AA - Free Report) accounts for about 0.51% of the fund's total assets, followed by Antero Resources Corporation (AR - Free Report) and Apa Corporation (APA - Free Report) .
FNX's top 10 holdings account for about 4.79% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust Mid Cap Core AlphaDEX ETF has lost about -5.82% so far, and is up about 7.57% over the last 12 months (as of 03/04/2022). FNX has traded between $90.51 and $107.11 in this past 52-week period.
The fund has a beta of 1.25 and standard deviation of 28.11% for the trailing three-year period, which makes FNX a medium risk choice in this particular space. With about 451 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard MidCap ETF (VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core S&P MidCap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard MidCap ETF has $53 billion in assets, iShares Core S&P MidCap ETF has $64.75 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
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 Blend.
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 Core AlphaDEX ETF (FNX) a Strong ETF Right Now?
A smart beta exchange traded fund, the First Trust Mid Cap Core AlphaDEX ETF (FNX - Free Report) debuted on 05/08/2007, and offers broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $1.01 billion, this makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. FNX is managed by First Trust Advisors. Before fees and expenses, this particular fund seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Core Index.
The NASDAQ AlphaDEX Mid Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Index.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for FNX are 0.59%, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.99%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FNX, it has heaviest allocation in the Financials sector --about 19.50% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Alcoa Corporation (AA - Free Report) accounts for about 0.51% of the fund's total assets, followed by Antero Resources Corporation (AR - Free Report) and Apa Corporation (APA - Free Report) .
FNX's top 10 holdings account for about 4.79% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust Mid Cap Core AlphaDEX ETF has lost about -5.82% so far, and is up about 7.57% over the last 12 months (as of 03/04/2022). FNX has traded between $90.51 and $107.11 in this past 52-week period.
The fund has a beta of 1.25 and standard deviation of 28.11% for the trailing three-year period, which makes FNX a medium risk choice in this particular space. With about 451 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard MidCap ETF (VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core S&P MidCap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard MidCap ETF has $53 billion in assets, iShares Core S&P MidCap ETF has $64.75 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
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 Blend.
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.