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Should First Trust Mid Cap Core AlphaDEX ETF (FNX) Be on Your Investing Radar?

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The First Trust Mid Cap Core AlphaDEX ETF (FNX - Free Report) was launched on 05/08/2007, and is a passively managed exchange traded fund designed to offer broad exposure to the Mid Cap Blend segment of the US equity market.

The fund is sponsored by First Trust Advisors. It has amassed assets over $929.02 million, making it one of the average sized ETFs attempting to match the Mid Cap Blend segment of the US equity market.

Why Mid Cap Blend

Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. Thus, companies that fall under this category provide a stable and growth-heavy investment.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

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.

Annual operating expenses for this ETF are 0.59%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 1.24%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 18.90% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, The Goodyear Tire & Rubber Company (GT - Free Report) accounts for about 0.47% of total assets, followed by Dillard's, Inc. (class A) (DDS - Free Report) and United States Steel Corporation (X - Free Report) .

The top 10 holdings account for about 4.34% of total assets under management.

Performance and Risk

FNX seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Core Index before fees and expenses. The NASDAQ AlphaDEX Mid Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Index.

The ETF has lost about -15.68% so far this year and is down about -18.30% in the last one year (as of 11/10/2022). In the past 52-week period, it has traded between $80.01 and $106.96.

The ETF has a beta of 1.20 and standard deviation of 29.97% for the trailing three-year period, making it a medium risk choice in the space. With about 451 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Mid 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, FNX is a sufficient option for those seeking exposure to the Style Box - Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard MidCap ETF (VO - Free Report) and the iShares Core S&P MidCap ETF (IJH - Free Report) track a similar index. While Vanguard MidCap ETF has $48.04 billion in assets, iShares Core S&P MidCap ETF has $61.03 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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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