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Should First Trust Mid Cap Value AlphaDEX ETF (FNK) Be on Your Investing Radar?
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Launched on 04/19/2011, the First Trust Mid Cap Value AlphaDEX ETF (FNK - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Mid Cap Value segment of the US equity market.
The fund is sponsored by First Trust Advisors. It has amassed assets over $222.52 million, making it one of the smaller ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. These types of companies, then, have a good balance of stability and growth potential.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.70%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.70%.
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 28.20% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Xpo, Inc. (XPO - Free Report) accounts for about 1.04% of total assets, followed by American Equity Investment Life Holding Company and Louisiana-Pacific Corporation (LPX - Free Report) .
The top 10 holdings account for about 9.39% of total assets under management.
Performance and Risk
FNK seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Value Index before fees and expenses. The NASDAQ AlphaDEX Mid Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Value Index.
The ETF has added about 7.47% so far this year and is up roughly 2.06% in the last one year (as of 08/28/2023). In the past 52-week period, it has traded between $38.16 and $50.05.
The ETF has a beta of 1.31 and standard deviation of 23.22% for the trailing three-year period, making it a medium risk choice in the space. With about 227 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Value 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, FNK is a good option for those seeking exposure to the Style Box - Mid Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell Mid-Cap Value ETF (IWS - Free Report) and the Vanguard Mid-Cap Value ETF (VOE - Free Report) track a similar index. While iShares Russell Mid-Cap Value ETF has $12.86 billion in assets, Vanguard Mid-Cap Value ETF has $15.70 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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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Should First Trust Mid Cap Value AlphaDEX ETF (FNK) Be on Your Investing Radar?
Launched on 04/19/2011, the First Trust Mid Cap Value AlphaDEX ETF (FNK - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Mid Cap Value segment of the US equity market.
The fund is sponsored by First Trust Advisors. It has amassed assets over $222.52 million, making it one of the smaller ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. These types of companies, then, have a good balance of stability and growth potential.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.70%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.70%.
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 28.20% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Xpo, Inc. (XPO - Free Report) accounts for about 1.04% of total assets, followed by American Equity Investment Life Holding Company and Louisiana-Pacific Corporation (LPX - Free Report) .
The top 10 holdings account for about 9.39% of total assets under management.
Performance and Risk
FNK seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Value Index before fees and expenses. The NASDAQ AlphaDEX Mid Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Value Index.
The ETF has added about 7.47% so far this year and is up roughly 2.06% in the last one year (as of 08/28/2023). In the past 52-week period, it has traded between $38.16 and $50.05.
The ETF has a beta of 1.31 and standard deviation of 23.22% for the trailing three-year period, making it a medium risk choice in the space. With about 227 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Value 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, FNK is a good option for those seeking exposure to the Style Box - Mid Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell Mid-Cap Value ETF (IWS - Free Report) and the Vanguard Mid-Cap Value ETF (VOE - Free Report) track a similar index. While iShares Russell Mid-Cap Value ETF has $12.86 billion in assets, Vanguard Mid-Cap Value ETF has $15.70 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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.