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Is First Trust Small Cap Core AlphaDEX ETF (FYX) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the First Trust Small Cap Core AlphaDEX ETF (FYX - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $855.97 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. FYX seeks to match the performance of the Nasdaq AlphaDEX Small Cap Core Index before fees and expenses.
The NASDAQ AlphaDEX Small Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap 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.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.61%.
It's 12-month trailing dividend yield comes in at 1.12%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
FYX's heaviest allocation is in the Financials sector, which is about 22.20% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Green Brick Partners, Inc. (GRBK - Free Report) accounts for about 0.49% of the fund's total assets, followed by Boise Cascade Company (BCC - Free Report) and Modine Manufacturing Company (MOD - Free Report) .
FYX's top 10 holdings account for about 4.31% of its total assets under management.
Performance and Risk
So far this year, FYX return is roughly 11.66%, and is up about 4.26% in the last one year (as of 08/10/2023). During this past 52-week period, the fund has traded between $72.71 and $90.02.
FYX has a beta of 1.28 and standard deviation of 23.64% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 526 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Small Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $55.49 billion in assets, iShares Core S&P Small-Cap ETF has $71.68 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
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 - Small 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 Small Cap Core AlphaDEX ETF (FYX) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the First Trust Small Cap Core AlphaDEX ETF (FYX - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $855.97 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. FYX seeks to match the performance of the Nasdaq AlphaDEX Small Cap Core Index before fees and expenses.
The NASDAQ AlphaDEX Small Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap 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.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.61%.
It's 12-month trailing dividend yield comes in at 1.12%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
FYX's heaviest allocation is in the Financials sector, which is about 22.20% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Green Brick Partners, Inc. (GRBK - Free Report) accounts for about 0.49% of the fund's total assets, followed by Boise Cascade Company (BCC - Free Report) and Modine Manufacturing Company (MOD - Free Report) .
FYX's top 10 holdings account for about 4.31% of its total assets under management.
Performance and Risk
So far this year, FYX return is roughly 11.66%, and is up about 4.26% in the last one year (as of 08/10/2023). During this past 52-week period, the fund has traded between $72.71 and $90.02.
FYX has a beta of 1.28 and standard deviation of 23.64% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 526 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Small Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $55.49 billion in assets, iShares Core S&P Small-Cap ETF has $71.68 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
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 - Small 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.