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Is First Trust Small Cap Core AlphaDEX ETF (FYX) a Strong ETF Right Now?
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The First Trust Small Cap Core AlphaDEX ETF (FYX - Free Report) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small 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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $813.87 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, FYX seeks to match the performance of the Nasdaq AlphaDEX Small Cap Core Index.
The NASDAQ AlphaDEX Small Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small 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.
Operating expenses on an annual basis are 0.61% for FYX, making it one of the most expensive products in the space.
FYX's 12-month trailing dividend yield is 1.22%.
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 FYX, it has heaviest allocation in the Financials sector --about 24.40% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, United States Cellular Corporation (USM - Free Report) accounts for about 0.79% of total assets, followed by Telephone And Data Systems, Inc. (TDS - Free Report) and Hudson Pacific Properties, Inc. (HPP - Free Report) .
Its top 10 holdings account for approximately 4.97% of FYX's total assets under management.
Performance and Risk
The ETF return is roughly 10.01% and was up about 7.24% so far this year and in the past one year (as of 12/11/2023), respectively. FYX has traded between $74.82 and $90.02 during this last 52-week period.
FYX has a beta of 1.26 and standard deviation of 22.90% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 526 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Small Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $56.85 billion in assets, iShares Core S&P Small-Cap ETF has $70.45 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
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 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 Small Cap Core AlphaDEX ETF (FYX) a Strong ETF Right Now?
The First Trust Small Cap Core AlphaDEX ETF (FYX - Free Report) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small 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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $813.87 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, FYX seeks to match the performance of the Nasdaq AlphaDEX Small Cap Core Index.
The NASDAQ AlphaDEX Small Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small 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.
Operating expenses on an annual basis are 0.61% for FYX, making it one of the most expensive products in the space.
FYX's 12-month trailing dividend yield is 1.22%.
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 FYX, it has heaviest allocation in the Financials sector --about 24.40% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, United States Cellular Corporation (USM - Free Report) accounts for about 0.79% of total assets, followed by Telephone And Data Systems, Inc. (TDS - Free Report) and Hudson Pacific Properties, Inc. (HPP - Free Report) .
Its top 10 holdings account for approximately 4.97% of FYX's total assets under management.
Performance and Risk
The ETF return is roughly 10.01% and was up about 7.24% so far this year and in the past one year (as of 12/11/2023), respectively. FYX has traded between $74.82 and $90.02 during this last 52-week period.
FYX has a beta of 1.26 and standard deviation of 22.90% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 526 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Small Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $56.85 billion in assets, iShares Core S&P Small-Cap ETF has $70.45 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
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 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.