We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is First Trust Small Cap Value AlphaDEX ETF (FYT) a Strong ETF Right Now?
Read MoreHide Full Article
The First Trust Small Cap Value AlphaDEX ETF (FYT - 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 - Small Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $265.67 million, this makes it one of the average sized ETFs in the Style Box - Small Cap Value. FYT is managed by First Trust Advisors. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Small Cap Value Index.
The NASDAQ AlphaDEX Small Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Value Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.71%, making it one of the most expensive products in the space.
FYT's 12-month trailing dividend yield is 1.17%.
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.
This ETF has heaviest allocation in the Financials sector - about 30.60% of the portfolio. Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Cornerstone Building Brands Inc. accounts for about 0.84% of the fund's total assets, followed by Mr. Cooper Group Inc. (COOP - Free Report) and Tegna Inc. (TGNA - Free Report) .
FYT's top 10 holdings account for about 7.56% of its total assets under management.
Performance and Risk
So far this year, FYT has lost about -4.58%, and is up roughly 2.74% in the last one year (as of 04/01/2022). During this past 52-week period, the fund has traded between $47.75 and $54.42.
The fund has a beta of 1.44 and standard deviation of 35.44% for the trailing three-year period, which makes FYT a high risk choice in this particular space. With about 263 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Small Cap Value AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 Value ETF (IWN - Free Report) tracks Russell 2000 Value Index and the Vanguard SmallCap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $14.72 billion in assets, Vanguard SmallCap Value ETF has $27.12 billion. IWN has an expense ratio of 0.24% and VBR 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 - Small 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is First Trust Small Cap Value AlphaDEX ETF (FYT) a Strong ETF Right Now?
The First Trust Small Cap Value AlphaDEX ETF (FYT - 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 - Small Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $265.67 million, this makes it one of the average sized ETFs in the Style Box - Small Cap Value. FYT is managed by First Trust Advisors. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Small Cap Value Index.
The NASDAQ AlphaDEX Small Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Value Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.71%, making it one of the most expensive products in the space.
FYT's 12-month trailing dividend yield is 1.17%.
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.
This ETF has heaviest allocation in the Financials sector - about 30.60% of the portfolio. Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Cornerstone Building Brands Inc. accounts for about 0.84% of the fund's total assets, followed by Mr. Cooper Group Inc. (COOP - Free Report) and Tegna Inc. (TGNA - Free Report) .
FYT's top 10 holdings account for about 7.56% of its total assets under management.
Performance and Risk
So far this year, FYT has lost about -4.58%, and is up roughly 2.74% in the last one year (as of 04/01/2022). During this past 52-week period, the fund has traded between $47.75 and $54.42.
The fund has a beta of 1.44 and standard deviation of 35.44% for the trailing three-year period, which makes FYT a high risk choice in this particular space. With about 263 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Small Cap Value AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 Value ETF (IWN - Free Report) tracks Russell 2000 Value Index and the Vanguard SmallCap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $14.72 billion in assets, Vanguard SmallCap Value ETF has $27.12 billion. IWN has an expense ratio of 0.24% and VBR 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 - Small 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.