The First Trust Small Cap Growth AlphaDEX ETF (FYC Quick QuoteFYC - Free Report) was launched on April 19, 2011, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Growth segment of the US equity market.

The fund is sponsored by First Trust Advisors. It has amassed assets over $1.39 billion, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.

Why Small Cap Growth

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Also, growth stocks are a type of equity that carries more risk compared to others. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.

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 0.7%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 0.11%.

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 Healthcare sector -- about 27.8% of the portfolio. Industrials and Information Technology round out the top three.

Looking at individual holdings, Ringcentral, Inc. (class A) (RNG) accounts for about 1.01% of total assets, followed by Acadian Asset Management Inc. (AAMI) and 10x Genomics, Inc. (class A) (TXG).

The top 10 holdings account for about 8.46% of total assets under management.

Performance and Risk

FYC seeks to match the performance of the Nasdaq AlphaDEX Small Cap Growth Index before fees and expenses. The NASDAQ AlphaDEX Small Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Growth Index.

The ETF has gained about 22.16% so far this year and is up about 27.65% in the last one year (as of 10/06/2026). In the past 52-week period, it has traded between $87.35 and $127.34.

The ETF has a beta of 1.19 and standard deviation of 21.71% for the trailing three-year period, making it a high risk choice in the space. With about 265 holdings, it effectively diversifies company-specific risk.

Alternatives

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

The iShares Russell 2000 Growth ETF (IWO) and the Vanguard Morningstar Small-Cap Growth ETF (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $14.39 billion in assets, Vanguard Morningstar Small-Cap Growth ETF has $23.61 billion. IWO has an expense ratio of 0.24% and VBK charges 0.05%.

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.