Looking for broad exposure to the Mid Cap Growth segment of the US equity market? You should consider the First Trust Mid Cap Growth AlphaDEX ETF (
FNY Quick Quote FNY - Free Report) , a passively managed exchange traded fund launched on 04/19/2011.
The fund is sponsored by First Trust Advisors. It has amassed assets over $444.46 million, making it one of the average sized ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. These types of companies, then, have a good balance of stability and growth potential.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Additionally, growth stocks have a greater level of risk associated with them. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.70%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 0.10%.
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.
This ETF has heaviest allocation to the Information Technology sector--about 19.80% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Exp World Holdings, Inc. (
EXPI Quick Quote EXPI - Free Report) accounts for about 0.92% of total assets, followed by Bath & Body Works, Inc. ( BBWI Quick Quote BBWI - Free Report) and Ares Management Corporation (class A) ( ARES Quick Quote ARES - Free Report) .
The top 10 holdings account for about 8.72% of total assets under management.
Performance and Risk
FNY seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Growth Index before fees and expenses. 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.
The ETF has added about 11.79% so far this year and it's up approximately 27.45% in the last one year (as of 10/11/2021). In the past 52-week period, it has traded between $53.43 and $76.53.
The ETF has a beta of 1.13 and standard deviation of 27% for the trailing three-year period, making it a medium risk choice in the space. With about 226 holdings, it effectively diversifies company-specific risk.
First Trust Mid Cap Growth AlphaDEX ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FNY is an excellent option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard MidCap Growth ETF (
VOT Quick Quote VOT - Free Report) and the iShares Russell MidCap Growth ETF ( IWP Quick Quote IWP - Free Report) track a similar index. While Vanguard MidCap Growth ETF has $11.47 billion in assets, iShares Russell MidCap Growth ETF has $15.65 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%. Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
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.