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Is First Trust Mid Cap Growth AlphaDEX ETF (FNY) a Strong ETF Right Now?
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Making its debut on 04/19/2011, smart beta exchange traded fund First Trust Mid Cap Growth AlphaDEX ETF (FNY - Free Report) provides investors broad exposure to the Style Box - Mid Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is sponsored by First Trust Advisors. It has amassed assets over $285.84 million, making it one of the average sized ETFs in the Style Box - Mid Cap Growth. Before fees and expenses, FNY seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Growth Index.
The NASDAQ AlphaDEX Mid Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Growth Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.70% for this ETF, which makes it one of the most expensive products in the space.
FNY's 12-month trailing dividend yield is 0%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector - about 17.90% of the portfolio. Information Technology and Industrials round out the top three.
Taking into account individual holdings, H&r Block, Inc. (HRB - Free Report) accounts for about 1.17% of the fund's total assets, followed by Us Dollar ($USD) and Murphy Usa Inc. (MUSA - Free Report) .
The top 10 holdings account for about 9.48% of total assets under management.
Performance and Risk
The ETF has lost about -19.66% so far this year and is down about -20.90% in the last one year (as of 09/09/2022). In the past 52-week period, it has traded between $53.88 and $79.63.
The fund has a beta of 1.13 and standard deviation of 28.30% for the trailing three-year period, which makes FNY a medium risk choice in this particular space. With about 224 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
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 $9.93 billion in assets, iShares Russell MidCap Growth ETF has $12.28 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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Is First Trust Mid Cap Growth AlphaDEX ETF (FNY) a Strong ETF Right Now?
Making its debut on 04/19/2011, smart beta exchange traded fund First Trust Mid Cap Growth AlphaDEX ETF (FNY - Free Report) provides investors broad exposure to the Style Box - Mid Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is sponsored by First Trust Advisors. It has amassed assets over $285.84 million, making it one of the average sized ETFs in the Style Box - Mid Cap Growth. Before fees and expenses, FNY seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Growth Index.
The NASDAQ AlphaDEX Mid Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Growth Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.70% for this ETF, which makes it one of the most expensive products in the space.
FNY's 12-month trailing dividend yield is 0%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector - about 17.90% of the portfolio. Information Technology and Industrials round out the top three.
Taking into account individual holdings, H&r Block, Inc. (HRB - Free Report) accounts for about 1.17% of the fund's total assets, followed by Us Dollar ($USD) and Murphy Usa Inc. (MUSA - Free Report) .
The top 10 holdings account for about 9.48% of total assets under management.
Performance and Risk
The ETF has lost about -19.66% so far this year and is down about -20.90% in the last one year (as of 09/09/2022). In the past 52-week period, it has traded between $53.88 and $79.63.
The fund has a beta of 1.13 and standard deviation of 28.30% for the trailing three-year period, which makes FNY a medium risk choice in this particular space. With about 224 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
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 $9.93 billion in assets, iShares Russell MidCap Growth ETF has $12.28 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.