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Is First Trust Mid Cap Growth AlphaDEX ETF (FNY) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Mid Cap Growth category of the market, the First Trust Mid Cap Growth AlphaDEX ETF (FNY - Free Report) is a smart beta exchange traded fund launched on 04/19/2011.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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
The fund is sponsored by First Trust Advisors. It has amassed assets over $237.85 million, making 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
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 cousins, other things remaining the same.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.77%.
The fund has a 12-month trailing dividend yield of 0.24%.
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.
FNY's heaviest allocation is in the Industrials sector, which is about 19.60% of the portfolio. Its Consumer Discretionary and Healthcare round out the top three.
When you look at individual holdings, United Airlines Holdings, Inc. (UAL - Free Report) accounts for about 0.95% of the fund's total assets, followed by Royal Caribbean Cruises Ltd. (RCL - Free Report) and Wynn Resorts, Limited (WYNN - Free Report) .
Its top 10 holdings account for approximately 8.21% of FNY's total assets under management.
Performance and Risk
So far this year, FNY has added about 0.39%, and is down about -14.35% in the last one year (as of 03/24/2023). During this past 52-week period, the fund has traded between $52.58 and $68.83.
The fund has a beta of 1.13 and standard deviation of 26.78% for the trailing three-year period, which makes FNY a medium risk choice in this particular space. With about 226 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 Mid-Cap Growth ETF (VOT - Free Report) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell Mid-Cap Growth ETF (IWP - Free Report) tracks Russell MidCap Growth Index. Vanguard Mid-Cap Growth ETF has $9.63 billion in assets, iShares Russell Mid-Cap Growth ETF has $11.55 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?
Designed to provide broad exposure to the Style Box - Mid Cap Growth category of the market, the First Trust Mid Cap Growth AlphaDEX ETF (FNY - Free Report) is a smart beta exchange traded fund launched on 04/19/2011.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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
The fund is sponsored by First Trust Advisors. It has amassed assets over $237.85 million, making 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
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 cousins, other things remaining the same.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.77%.
The fund has a 12-month trailing dividend yield of 0.24%.
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.
FNY's heaviest allocation is in the Industrials sector, which is about 19.60% of the portfolio. Its Consumer Discretionary and Healthcare round out the top three.
When you look at individual holdings, United Airlines Holdings, Inc. (UAL - Free Report) accounts for about 0.95% of the fund's total assets, followed by Royal Caribbean Cruises Ltd. (RCL - Free Report) and Wynn Resorts, Limited (WYNN - Free Report) .
Its top 10 holdings account for approximately 8.21% of FNY's total assets under management.
Performance and Risk
So far this year, FNY has added about 0.39%, and is down about -14.35% in the last one year (as of 03/24/2023). During this past 52-week period, the fund has traded between $52.58 and $68.83.
The fund has a beta of 1.13 and standard deviation of 26.78% for the trailing three-year period, which makes FNY a medium risk choice in this particular space. With about 226 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 Mid-Cap Growth ETF (VOT - Free Report) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell Mid-Cap Growth ETF (IWP - Free Report) tracks Russell MidCap Growth Index. Vanguard Mid-Cap Growth ETF has $9.63 billion in assets, iShares Russell Mid-Cap Growth ETF has $11.55 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.