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Is First Trust Mid Cap Growth AlphaDEX ETF (FNY) a Strong ETF Right Now?

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Designed to provide broad exposure to the Style Box - Mid Cap Growth category of the market, the First Trust Mid Cap Growth AlphaDEX ETF (FNY - Free Report) is a smart beta exchange traded fund launched on 04/19/2011.

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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

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.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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

Because the fund has amassed over $291.37 million, this makes it one of the average sized ETFs in the Style Box - Mid Cap Growth. FNY is managed by First Trust Advisors. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Growth Index.

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.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

With one of the most expensive products in the space, this ETF has annual operating expenses of 0.70%.

It's 12-month trailing dividend yield comes in at 0%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

FNY's heaviest allocation is in the Healthcare sector, which is about 15.90% of the portfolio. Its Information Technology and Industrials round out the top three.

When you look at individual holdings, Apa Corporation (APA - Free Report) accounts for about 1.19% of the fund's total assets, followed by Antero Resources Corporation (AR - Free Report) and Ovintiv Inc. (OVV - Free Report) .

FNY's top 10 holdings account for about 10.74% of its total assets under management.

Performance and Risk

So far this year, FNY has lost about -17.24%, and is down about -13.86% in the last one year (as of 05/02/2022). During this past 52-week period, the fund has traded between $61.34 and $79.63.

FNY has a beta of 1.12 and standard deviation of 27.11% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 226 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Mid Cap Growth AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.

Vanguard MidCap Growth ETF (VOT - Free Report) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell MidCap Growth ETF (IWP - Free Report) tracks Russell MidCap Growth Index. Vanguard MidCap Growth ETF has $10.07 billion in assets, iShares Russell MidCap Growth ETF has $12.02 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.

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 - Mid 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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