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Is First Trust Multi Cap Growth AlphaDEX ETF (FAD) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - All Cap Growth category of the market, the First Trust Multi Cap Growth AlphaDEX ETF (FAD - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
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.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $226.75 million, making it one of the average sized ETFs in the Style Box - All Cap Growth. Before fees and expenses, FAD seeks to match the performance of the Nasdaq AlphaDEX Multi Cap Growth Index.
The NASDAQ AlphaDEX Multi Cap Growth Index is an enhanced 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.
Annual operating expenses for FAD are 0.64%, which makes it on par with most peer products in the space.
FAD's 12-month trailing dividend yield is 0.69%.
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.
For FAD, it has heaviest allocation in the Industrials sector --about 19.80% of the portfolio --while Financials and Information Technology round out the top three.
Taking into account individual holdings, Applovin Corp. (class A) (APP - Free Report) accounts for about 1.14% of the fund's total assets, followed by Palantir Technologies Inc. (class A) (PLTR - Free Report) and Axon Enterprise Inc. (AXON - Free Report) .
FAD's top 10 holdings account for about 6.42% of its total assets under management.
Performance and Risk
The ETF has gained about 30.91% so far this year and it's up approximately 32.41% in the last one year (as of 12/17/2024). In the past 52-week period, it has traded between $108.58 and $150.30.
The fund has a beta of 1.12 and standard deviation of 20.45% for the trailing three-year period, which makes FAD a medium risk choice in this particular space. With about 677 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Multi Cap Growth AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Fidelity Blue Chip Growth ETF (FBCG - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Growth ETF (IUSG - Free Report) tracks S&P 900 Growth Index. Fidelity Blue Chip Growth ETF has $2.93 billion in assets, iShares Core S&P U.S. Growth ETF has $21.89 billion. FBCG has an expense ratio of 0.59% and IUSG 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 Growth.
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 Growth AlphaDEX ETF (FAD) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - All Cap Growth category of the market, the First Trust Multi Cap Growth AlphaDEX ETF (FAD - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
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.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $226.75 million, making it one of the average sized ETFs in the Style Box - All Cap Growth. Before fees and expenses, FAD seeks to match the performance of the Nasdaq AlphaDEX Multi Cap Growth Index.
The NASDAQ AlphaDEX Multi Cap Growth Index is an enhanced 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.
Annual operating expenses for FAD are 0.64%, which makes it on par with most peer products in the space.
FAD's 12-month trailing dividend yield is 0.69%.
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.
For FAD, it has heaviest allocation in the Industrials sector --about 19.80% of the portfolio --while Financials and Information Technology round out the top three.
Taking into account individual holdings, Applovin Corp. (class A) (APP - Free Report) accounts for about 1.14% of the fund's total assets, followed by Palantir Technologies Inc. (class A) (PLTR - Free Report) and Axon Enterprise Inc. (AXON - Free Report) .
FAD's top 10 holdings account for about 6.42% of its total assets under management.
Performance and Risk
The ETF has gained about 30.91% so far this year and it's up approximately 32.41% in the last one year (as of 12/17/2024). In the past 52-week period, it has traded between $108.58 and $150.30.
The fund has a beta of 1.12 and standard deviation of 20.45% for the trailing three-year period, which makes FAD a medium risk choice in this particular space. With about 677 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Multi Cap Growth AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Fidelity Blue Chip Growth ETF (FBCG - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Growth ETF (IUSG - Free Report) tracks S&P 900 Growth Index. Fidelity Blue Chip Growth ETF has $2.93 billion in assets, iShares Core S&P U.S. Growth ETF has $21.89 billion. FBCG has an expense ratio of 0.59% and IUSG 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 Growth.
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.