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Is First Trust Mid Cap Growth AlphaDEX ETF (FNY) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust Mid Cap Growth AlphaDEX ETF (FNY - Free Report) debuted on 04/19/2011, and offers broad exposure to the Style Box - Mid Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
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.
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
FNY is managed by First Trust Advisors, and this fund has amassed over $262.44 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Growth Index.
The NASDAQ AlphaDEX Mid Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Growth Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.70%.
It has a 12-month trailing dividend yield of 0.39%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 27% of the portfolio, the fund has heaviest allocation to the Industrials sector; Consumer Discretionary and Information Technology round out the top three.
Taking into account individual holdings, Super Micro Computer, Inc. (SMCI - Free Report) accounts for about 1.68% of the fund's total assets, followed by Carnival Corporation (CCL - Free Report) and Builders Firstsource, Inc. (BLDR - Free Report) .
FNY's top 10 holdings account for about 10.15% of its total assets under management.
Performance and Risk
So far this year, FNY return is roughly 9.80%, and is down about -1.79% in the last one year (as of 08/18/2023). During this past 52-week period, the fund has traded between $52.58 and $67.14.
The fund has a beta of 1.14 and standard deviation of 23.75% for the trailing three-year period, which makes FNY a medium risk choice in this particular space. With about 224 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Growth AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Mid-Cap Growth ETF (VOT - Free Report) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell Mid-Cap Growth ETF (IWP - Free Report) tracks Russell MidCap Growth Index. Vanguard Mid-Cap Growth ETF has $10.55 billion in assets, iShares Russell Mid-Cap Growth ETF has $12.53 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.
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 Growth.
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 Growth AlphaDEX ETF (FNY) a Strong ETF Right Now?
A smart beta exchange traded fund, the First Trust Mid Cap Growth AlphaDEX ETF (FNY - Free Report) debuted on 04/19/2011, and offers broad exposure to the Style Box - Mid Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
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.
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
FNY is managed by First Trust Advisors, and this fund has amassed over $262.44 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Growth Index.
The NASDAQ AlphaDEX Mid Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Growth Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.70%.
It has a 12-month trailing dividend yield of 0.39%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 27% of the portfolio, the fund has heaviest allocation to the Industrials sector; Consumer Discretionary and Information Technology round out the top three.
Taking into account individual holdings, Super Micro Computer, Inc. (SMCI - Free Report) accounts for about 1.68% of the fund's total assets, followed by Carnival Corporation (CCL - Free Report) and Builders Firstsource, Inc. (BLDR - Free Report) .
FNY's top 10 holdings account for about 10.15% of its total assets under management.
Performance and Risk
So far this year, FNY return is roughly 9.80%, and is down about -1.79% in the last one year (as of 08/18/2023). During this past 52-week period, the fund has traded between $52.58 and $67.14.
The fund has a beta of 1.14 and standard deviation of 23.75% for the trailing three-year period, which makes FNY a medium risk choice in this particular space. With about 224 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Growth AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Mid-Cap Growth ETF (VOT - Free Report) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell Mid-Cap Growth ETF (IWP - Free Report) tracks Russell MidCap Growth Index. Vanguard Mid-Cap Growth ETF has $10.55 billion in assets, iShares Russell Mid-Cap Growth ETF has $12.53 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.
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 Growth.
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.