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Is First Trust Mid Cap Core AlphaDEX ETF (FNX) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Mid Cap Blend category of the market, the First Trust Mid Cap Core AlphaDEX ETF (FNX - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
FNX is managed by First Trust Advisors, and this fund has amassed over $941.67 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund, before fees and expenses, 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
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.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.59%.
FNX's 12-month trailing dividend yield is 1.29%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For FNX, it has heaviest allocation in the Financials sector --about 21.20% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, H&r Block, Inc. (HRB - Free Report) accounts for about 0.57% of the fund's total assets, followed by Penske Automotive Group, Inc. (PAG - Free Report) and Autonation, Inc. (AN - Free Report) .
Its top 10 holdings account for approximately 4.76% of FNX's total assets under management.
Performance and Risk
The ETF has lost about -14.04% and is down about -13.17% so far this year and in the past one year (as of 09/05/2022), respectively. FNX has traded between $82.08 and $107.11 during this last 52-week period.
The ETF has a beta of 1.20 and standard deviation of 29.27% for the trailing three-year period, making it a medium risk choice in the space. With about 448 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 $49.21 billion in assets, iShares Core S&P MidCap ETF has $60.05 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?
Designed to provide broad exposure to the Style Box - Mid Cap Blend category of the market, the First Trust Mid Cap Core AlphaDEX ETF (FNX - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
FNX is managed by First Trust Advisors, and this fund has amassed over $941.67 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund, before fees and expenses, 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
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.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.59%.
FNX's 12-month trailing dividend yield is 1.29%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For FNX, it has heaviest allocation in the Financials sector --about 21.20% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, H&r Block, Inc. (HRB - Free Report) accounts for about 0.57% of the fund's total assets, followed by Penske Automotive Group, Inc. (PAG - Free Report) and Autonation, Inc. (AN - Free Report) .
Its top 10 holdings account for approximately 4.76% of FNX's total assets under management.
Performance and Risk
The ETF has lost about -14.04% and is down about -13.17% so far this year and in the past one year (as of 09/05/2022), respectively. FNX has traded between $82.08 and $107.11 during this last 52-week period.
The ETF has a beta of 1.20 and standard deviation of 29.27% for the trailing three-year period, making it a medium risk choice in the space. With about 448 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 $49.21 billion in assets, iShares Core S&P MidCap ETF has $60.05 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.