The First Trust Small Cap Value AlphaDEX ETF (
FYT Quick Quote FYT - Free Report) was launched on 04/19/2011, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by First Trust Advisors. It has amassed assets over $228.99 million, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.71%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.24%.
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.
This ETF has heaviest allocation to the Financials sector--about 31.90% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Asbury Automotive Group, Inc. (
ABG Quick Quote ABG - Free Report) accounts for about 0.81% of total assets, followed by Group 1 Automotive, Inc. ( GPI Quick Quote GPI - Free Report) and Sanmina Corporation ( SANM Quick Quote SANM - Free Report) .
The top 10 holdings account for about 7.31% of total assets under management.
Performance and Risk
FYT seeks to match the performance of the Nasdaq AlphaDEX Small Cap Value Index before fees and expenses. The NASDAQ AlphaDEX Small Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Value Index.
The ETF has lost about -6.87% so far this year and is up roughly 2.25% in the last one year (as of 08/22/2022). In the past 52-week period, it has traded between $42.85 and $54.42.
The ETF has a beta of 1.37 and standard deviation of 35.90% for the trailing three-year period, making it a high risk choice in the space. With about 263 holdings, it effectively diversifies company-specific risk.
First Trust Small Cap Value 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, FYT is a sufficient option for those seeking exposure to the Style Box - Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 Value ETF (
IWN Quick Quote IWN - Free Report) and the Vanguard SmallCap Value ETF ( VBR Quick Quote VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $12.88 billion in assets, Vanguard SmallCap Value ETF has $24.46 billion. IWN has an expense ratio of 0.23% and VBR charges 0.07%. 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.