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Is First Trust Multi Cap Value AlphaDEX ETF (FAB) a Strong ETF Right Now?
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Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Multi Cap Value AlphaDEX ETF (FAB - Free Report) provides investors broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $208.37 million, which makes it one of the average sized ETFs in the Style Box - All Cap Value. FAB seeks to match the performance of the Nasdaq AlphaDEX Multi Cap Value Index before fees and expenses.
The NASDAQ AlphaDEX Multi Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Index, NASDAQ US 600 Mid Cap Index and NASDAQ US 700 Small Cap Index.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.67% for this ETF, which makes it one of the more expensive products in the space.
FAB's 12-month trailing dividend yield is 1.85%.
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.
Representing 21.70% of the portfolio, the fund has heaviest allocation to the Financials sector; Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Celanese Corporation (CE - Free Report) accounts for about 0.50% of total assets, followed by Paramount Global (class B) (PARA - Free Report) and Stanley Black & Decker, Inc. (SWK - Free Report) .
FAB's top 10 holdings account for about 4.88% of its total assets under management.
Performance and Risk
The ETF has lost about -2.48% and is down about -5.53% so far this year and in the past one year (as of 03/14/2023), respectively. FAB has traded between $60.81 and $78.48 during this last 52-week period.
The ETF has a beta of 1.23 and standard deviation of 29.91% for the trailing three-year period, making it a medium risk choice in the space. With about 675 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Multi Cap Value AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $7.49 billion in assets, iShares Core S&P U.S. Value ETF has $12.48 billion. DFAT has an expense ratio of 0.29% and IUSV charges 0.04%.
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 - All Cap Value.
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 Multi Cap Value AlphaDEX ETF (FAB) a Strong ETF Right Now?
Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Multi Cap Value AlphaDEX ETF (FAB - Free Report) provides investors broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $208.37 million, which makes it one of the average sized ETFs in the Style Box - All Cap Value. FAB seeks to match the performance of the Nasdaq AlphaDEX Multi Cap Value Index before fees and expenses.
The NASDAQ AlphaDEX Multi Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Index, NASDAQ US 600 Mid Cap Index and NASDAQ US 700 Small Cap Index.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.67% for this ETF, which makes it one of the more expensive products in the space.
FAB's 12-month trailing dividend yield is 1.85%.
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.
Representing 21.70% of the portfolio, the fund has heaviest allocation to the Financials sector; Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Celanese Corporation (CE - Free Report) accounts for about 0.50% of total assets, followed by Paramount Global (class B) (PARA - Free Report) and Stanley Black & Decker, Inc. (SWK - Free Report) .
FAB's top 10 holdings account for about 4.88% of its total assets under management.
Performance and Risk
The ETF has lost about -2.48% and is down about -5.53% so far this year and in the past one year (as of 03/14/2023), respectively. FAB has traded between $60.81 and $78.48 during this last 52-week period.
The ETF has a beta of 1.23 and standard deviation of 29.91% for the trailing three-year period, making it a medium risk choice in the space. With about 675 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Multi Cap Value AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $7.49 billion in assets, iShares Core S&P U.S. Value ETF has $12.48 billion. DFAT has an expense ratio of 0.29% and IUSV charges 0.04%.
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 - All Cap Value.
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.