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Is First Trust Mid Cap Core AlphaDEX ETF (FNX) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust Mid Cap Core AlphaDEX ETF (FNX - Free Report) debuted on 05/08/2007, and offers broad exposure to the Style Box - Mid Cap Blend 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.
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.
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 sponsored by First Trust Advisors. It has amassed assets over $956.70 million, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. 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.
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 0.62% for this ETF, which makes it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.19%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
FNX's heaviest allocation is in the Consumer Discretionary sector, which is about 20.10% of the portfolio. Its Industrials and Financials round out the top three.
When you look at individual holdings, United Airlines Holdings, Inc. (UAL - Free Report) accounts for about 0.47% of the fund's total assets, followed by Amkor Technology, Inc. (AMKR - Free Report) and Royal Caribbean Cruises Ltd. (RCL - Free Report) .
Its top 10 holdings account for approximately 4.21% of FNX's total assets under management.
Performance and Risk
Year-to-date, the First Trust Mid Cap Core AlphaDEX ETF has lost about -0.33% so far, and is down about -8.60% over the last 12 months (as of 03/17/2023). FNX has traded between $80.01 and $100.72 in this past 52-week period.
The fund has a beta of 1.21 and standard deviation of 27.39% for the trailing three-year period, which makes FNX a medium risk choice in this particular space. With about 451 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap ETF (VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard Mid-Cap ETF has $50.54 billion in assets, iShares Core S&P Mid-Cap ETF has $64.63 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
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 Blend.
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 Core AlphaDEX ETF (FNX) a Strong ETF Right Now?
A smart beta exchange traded fund, the First Trust Mid Cap Core AlphaDEX ETF (FNX - Free Report) debuted on 05/08/2007, and offers broad exposure to the Style Box - Mid Cap Blend 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.
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.
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 sponsored by First Trust Advisors. It has amassed assets over $956.70 million, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. 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.
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 0.62% for this ETF, which makes it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.19%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
FNX's heaviest allocation is in the Consumer Discretionary sector, which is about 20.10% of the portfolio. Its Industrials and Financials round out the top three.
When you look at individual holdings, United Airlines Holdings, Inc. (UAL - Free Report) accounts for about 0.47% of the fund's total assets, followed by Amkor Technology, Inc. (AMKR - Free Report) and Royal Caribbean Cruises Ltd. (RCL - Free Report) .
Its top 10 holdings account for approximately 4.21% of FNX's total assets under management.
Performance and Risk
Year-to-date, the First Trust Mid Cap Core AlphaDEX ETF has lost about -0.33% so far, and is down about -8.60% over the last 12 months (as of 03/17/2023). FNX has traded between $80.01 and $100.72 in this past 52-week period.
The fund has a beta of 1.21 and standard deviation of 27.39% for the trailing three-year period, which makes FNX a medium risk choice in this particular space. With about 451 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap ETF (VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard Mid-Cap ETF has $50.54 billion in assets, iShares Core S&P Mid-Cap ETF has $64.63 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
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 Blend.
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.