Looking for broad exposure to the Small Cap Blend segment of the US equity market? You should consider the First Trust Small Cap Core AlphaDEX ETF (
FYX Quick Quote FYX - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
The fund is sponsored by First Trust Advisors. It has amassed assets over $976.55 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.61%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 23% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Dillard's, Inc. (class A) (
DDS Quick Quote DDS - Free Report) accounts for about 0.39% of total assets, followed by Calix, Inc. ( CALX Quick Quote CALX - Free Report) and Genworth Financial, Inc. ( GNW Quick Quote GNW - Free Report) .
The top 10 holdings account for about 3.57% of total assets under management.
Performance and Risk
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.
The ETF has lost about -2.22% so far this year and was up about 13.67% in the last one year (as of 01/17/2022). In the past 52-week period, it has traded between $80.84 and $101.
The ETF has a beta of 1.33 and standard deviation of 31.48% for the trailing three-year period, making it a medium risk choice in the space. With about 526 holdings, it effectively diversifies company-specific risk.
First Trust Small Cap Core AlphaDEX ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FYX is a reasonable option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 ETF (
IWM Quick Quote IWM - Free Report) and the iShares Core S&P SmallCap ETF ( IJR Quick Quote IJR - Free Report) track a similar index. While iShares Russell 2000 ETF has $65.08 billion in assets, iShares Core S&P SmallCap ETF has $75.33 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%. 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.