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Is First Trust Small Cap Growth AlphaDEX ETF (FYC) a Strong ETF Right Now?
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The First Trust Small Cap Growth AlphaDEX ETF (FYC - 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 Growth 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
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
FYC is managed by First Trust Advisors, and this fund has amassed over $260.33 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Growth. Before fees and expenses, FYC seeks to match the performance of the Nasdaq AlphaDEX Small Cap Growth Index.
The NASDAQ AlphaDEX Small Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Growth 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 FYC are 0.70%, which makes it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 0.58%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FYC, it has heaviest allocation in the Industrials sector --about 25.20% of the portfolio --while Information Technology and Consumer Discretionary round out the top three.
Taking into account individual holdings, Dorian Lpg Ltd. (LPG - Free Report) accounts for about 0.84% of the fund's total assets, followed by Rxsight, Inc. (RXST - Free Report) and Ies Holdings, Inc. (IESC - Free Report) .
Its top 10 holdings account for approximately 7.63% of FYC's total assets under management.
Performance and Risk
Year-to-date, the First Trust Small Cap Growth AlphaDEX ETF has lost about -0.22% so far, and is up roughly 11.86% over the last 12 months (as of 03/15/2024). FYC has traded between $51.50 and $65.03 in this past 52-week period.
FYC has a beta of 1.18 and standard deviation of 24.43% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 265 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Small Cap Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 Growth ETF (IWO - Free Report) tracks Russell 2000 Growth Index and the Vanguard Small-Cap Growth ETF (VBK - Free Report) tracks CRSP U.S. Small Cap Growth Index. IShares Russell 2000 Growth ETF has $11.33 billion in assets, Vanguard Small-Cap Growth ETF has $16.76 billion. IWO has an expense ratio of 0.24% and VBK 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 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 Small Cap Growth AlphaDEX ETF (FYC) a Strong ETF Right Now?
The First Trust Small Cap Growth AlphaDEX ETF (FYC - 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 Growth 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
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
FYC is managed by First Trust Advisors, and this fund has amassed over $260.33 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Growth. Before fees and expenses, FYC seeks to match the performance of the Nasdaq AlphaDEX Small Cap Growth Index.
The NASDAQ AlphaDEX Small Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Growth 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 FYC are 0.70%, which makes it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 0.58%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FYC, it has heaviest allocation in the Industrials sector --about 25.20% of the portfolio --while Information Technology and Consumer Discretionary round out the top three.
Taking into account individual holdings, Dorian Lpg Ltd. (LPG - Free Report) accounts for about 0.84% of the fund's total assets, followed by Rxsight, Inc. (RXST - Free Report) and Ies Holdings, Inc. (IESC - Free Report) .
Its top 10 holdings account for approximately 7.63% of FYC's total assets under management.
Performance and Risk
Year-to-date, the First Trust Small Cap Growth AlphaDEX ETF has lost about -0.22% so far, and is up roughly 11.86% over the last 12 months (as of 03/15/2024). FYC has traded between $51.50 and $65.03 in this past 52-week period.
FYC has a beta of 1.18 and standard deviation of 24.43% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 265 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Small Cap Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 Growth ETF (IWO - Free Report) tracks Russell 2000 Growth Index and the Vanguard Small-Cap Growth ETF (VBK - Free Report) tracks CRSP U.S. Small Cap Growth Index. IShares Russell 2000 Growth ETF has $11.33 billion in assets, Vanguard Small-Cap Growth ETF has $16.76 billion. IWO has an expense ratio of 0.24% and VBK 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 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.