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Is First Trust Small Cap Core AlphaDEX ETF (FYX) a Strong ETF Right Now?
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The First Trust Small Cap Core AlphaDEX ETF (FYX - Free Report) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of 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
FYX is managed by First Trust Advisors, and this fund has amassed over $881.62 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the Nasdaq AlphaDEX Small Cap Core Index.
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.
Annual operating expenses for this ETF are 0.60%, making it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.22%.
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.
For FYX, it has heaviest allocation in the Financials sector --about 23.80% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Foot Locker, Inc. (FL - Free Report) accounts for about 0.47% of the fund's total assets, followed by Dorian Lpg Ltd. (LPG - Free Report) and Sally Beauty Holdings, Inc. (SBH - Free Report) .
The top 10 holdings account for about 3.89% of total assets under management.
Performance and Risk
The ETF has lost about -0.09% and it's up approximately 6.83% so far this year and in the past one year (as of 02/13/2024), respectively. FYX has traded between $74.82 and $93.04 during this last 52-week period.
FYX has a beta of 1.26 and standard deviation of 22.78% 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 $61.63 billion in assets, iShares Core S&P Small-Cap ETF has $77.43 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?
The First Trust Small Cap Core AlphaDEX ETF (FYX - Free Report) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of 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
FYX is managed by First Trust Advisors, and this fund has amassed over $881.62 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the Nasdaq AlphaDEX Small Cap Core Index.
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.
Annual operating expenses for this ETF are 0.60%, making it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.22%.
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.
For FYX, it has heaviest allocation in the Financials sector --about 23.80% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Foot Locker, Inc. (FL - Free Report) accounts for about 0.47% of the fund's total assets, followed by Dorian Lpg Ltd. (LPG - Free Report) and Sally Beauty Holdings, Inc. (SBH - Free Report) .
The top 10 holdings account for about 3.89% of total assets under management.
Performance and Risk
The ETF has lost about -0.09% and it's up approximately 6.83% so far this year and in the past one year (as of 02/13/2024), respectively. FYX has traded between $74.82 and $93.04 during this last 52-week period.
FYX has a beta of 1.26 and standard deviation of 22.78% 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 $61.63 billion in assets, iShares Core S&P Small-Cap ETF has $77.43 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.