The First Trust Small Cap Core AlphaDEX ETF (
FYX Quick Quote FYX - Free Report) was launched on 05/08/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Small Cap Blend category of the market. 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.
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
The fund is managed by First Trust Advisors, and has been able to amass over $975.12 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. FYX seeks to match the performance of the Nasdaq AlphaDEX Small Cap Core Index before fees and expenses.
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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.61%, making it one of the most expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.01%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 23% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Dillard's, Inc. (class A) (
DDS Quick Quote DDS - Free Report) accounts for about 0.39% of the fund's total assets, followed by Calix, Inc. ( CALX Quick Quote CALX - Free Report) and Genworth Financial, Inc. ( GNW Quick Quote GNW - Free Report) .
Its top 10 holdings account for approximately 3.57% of FYX's total assets under management.
Performance and Risk
Year-to-date, the First Trust Small Cap Core AlphaDEX ETF has lost about -2.36% so far, and is up about 15.48% over the last 12 months (as of 01/13/2022). FYX has traded between $80.84 and $101 in this past 52-week period.
The fund has a beta of 1.33 and standard deviation of 31.50% for the trailing three-year period, which makes FYX a medium risk choice in this particular space. With about 526 holdings, it effectively diversifies company-specific risk.
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 Quick Quote IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P SmallCap ETF ( IJR Quick Quote IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $66.17 billion in assets, iShares Core S&P SmallCap ETF has $74.94 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.
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.