If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the First Trust Small Cap Core AlphaDEX ETF (FYX Quick QuoteFYX - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.

The fund is sponsored by First Trust Advisors. It has amassed assets over $968.15 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.

Why Small Cap Blend

Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

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 0.61%, making it one of the most expensive products in the space.

It has a 12-month trailing dividend yield of 1.60%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 21.20% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Rocket Lab Usa, Inc. (RKLB Quick QuoteRKLB - Free Report) accounts for about 0.81% of total assets, followed by Brinker International, Inc. (EAT Quick QuoteEAT - Free Report) and Corecivic, Inc. .

The top 10 holdings account for about 4.77% of total assets under management.

Performance and Risk

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.

The ETF has added roughly 1.13% so far this year and was up about 20% in the last one year (as of 01/17/2025). In the past 52-week period, it has traded between $86.33 and $110.53.

The ETF has a beta of 1.26 and standard deviation of 22.47% for the trailing three-year period, making it a medium risk choice in the space. With about 525 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Small Cap Core 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, FYX is a reasonable option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 ETF (IWM Quick QuoteIWM - Free Report) and the iShares Core S&P Small-Cap ETF (IJR Quick QuoteIJR - Free Report) track a similar index. While iShares Russell 2000 ETF has $72.65 billion in assets, iShares Core S&P Small-Cap ETF has $89.08 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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.