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Is First Trust Mid Cap Growth AlphaDEX ETF (FNY) a Strong ETF Right Now?
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The First Trust Mid Cap Growth AlphaDEX ETF (FNY - Free Report) was launched on 04/19/2011, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Mid Cap Growth category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
FNY is managed by First Trust Advisors, and this fund has amassed over $449.64 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Growth. FNY seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Growth Index before fees and expenses.
The NASDAQ AlphaDEX Mid Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Growth 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.
Operating expenses on an annual basis are 0.70% for FNY, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 0.09%.
Sector Exposure and Top Holdings
ETFs offer 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.
Representing 19.10% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Consumer Discretionary round out the top three.
Taking into account individual holdings, Avis Budget Group, Inc. (CAR - Free Report) accounts for about 0.98% of the fund's total assets, followed by Apa Corporation (APA - Free Report) and Exp World Holdings, Inc. (EXPI - Free Report) .
The top 10 holdings account for about 8.55% of total assets under management.
Performance and Risk
The ETF return is roughly 17.88% and it's up approximately 34.60% so far this year and in the past one year (as of 10/26/2021), respectively. FNY has traded between $53.43 and $76.53 during this last 52-week period.
The ETF has a beta of 1.13 and standard deviation of 26.68% 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 Growth AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard MidCap Growth ETF (VOT - Free Report) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell MidCap Growth ETF (IWP - Free Report) tracks Russell MidCap Growth Index. Vanguard MidCap Growth ETF has $12.28 billion in assets, iShares Russell MidCap Growth ETF has $16.66 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.
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 - Mid 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 Mid Cap Growth AlphaDEX ETF (FNY) a Strong ETF Right Now?
The First Trust Mid Cap Growth AlphaDEX ETF (FNY - Free Report) was launched on 04/19/2011, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Mid Cap Growth category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
FNY is managed by First Trust Advisors, and this fund has amassed over $449.64 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Growth. FNY seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Growth Index before fees and expenses.
The NASDAQ AlphaDEX Mid Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Growth 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.
Operating expenses on an annual basis are 0.70% for FNY, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 0.09%.
Sector Exposure and Top Holdings
ETFs offer 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.
Representing 19.10% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Consumer Discretionary round out the top three.
Taking into account individual holdings, Avis Budget Group, Inc. (CAR - Free Report) accounts for about 0.98% of the fund's total assets, followed by Apa Corporation (APA - Free Report) and Exp World Holdings, Inc. (EXPI - Free Report) .
The top 10 holdings account for about 8.55% of total assets under management.
Performance and Risk
The ETF return is roughly 17.88% and it's up approximately 34.60% so far this year and in the past one year (as of 10/26/2021), respectively. FNY has traded between $53.43 and $76.53 during this last 52-week period.
The ETF has a beta of 1.13 and standard deviation of 26.68% 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 Growth AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard MidCap Growth ETF (VOT - Free Report) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell MidCap Growth ETF (IWP - Free Report) tracks Russell MidCap Growth Index. Vanguard MidCap Growth ETF has $12.28 billion in assets, iShares Russell MidCap Growth ETF has $16.66 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.
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 - Mid 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.