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Is First Trust Mid Cap Core AlphaDEX ETF (FNX) a Strong ETF Right Now?
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Launched on 05/08/2007, the First Trust Mid Cap Core AlphaDEX ETF (FNX - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FNX has been able to amass assets over $1.09 billion, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. FNX, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Core Index.
The NASDAQ AlphaDEX Mid Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap 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.
Annual operating expenses for FNX are 0.60%, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.13%.
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.
For FNX, it has heaviest allocation in the Industrials sector --about 19.50% of the portfolio --while Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Macy's, Inc. (M - Free Report) accounts for about 0.62% of the fund's total assets, followed by Affirm Holdings, Inc. (class A) (AFRM - Free Report) and Immunogen, Inc. .
Its top 10 holdings account for approximately 4.91% of FNX's total assets under management.
Performance and Risk
The ETF has lost about -1.66% and is up roughly 10.11% so far this year and in the past one year (as of 01/24/2024), respectively. FNX has traded between $85.22 and $105.52 during this last 52-week period.
FNX has a beta of 1.22 and standard deviation of 21.43% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 451 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap ETF (VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard Mid-Cap ETF has $58.83 billion in assets, iShares Core S&P Mid-Cap ETF has $76.18 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
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 Blend.
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 Core AlphaDEX ETF (FNX) a Strong ETF Right Now?
Launched on 05/08/2007, the First Trust Mid Cap Core AlphaDEX ETF (FNX - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FNX has been able to amass assets over $1.09 billion, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. FNX, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Core Index.
The NASDAQ AlphaDEX Mid Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap 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.
Annual operating expenses for FNX are 0.60%, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.13%.
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.
For FNX, it has heaviest allocation in the Industrials sector --about 19.50% of the portfolio --while Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Macy's, Inc. (M - Free Report) accounts for about 0.62% of the fund's total assets, followed by Affirm Holdings, Inc. (class A) (AFRM - Free Report) and Immunogen, Inc. .
Its top 10 holdings account for approximately 4.91% of FNX's total assets under management.
Performance and Risk
The ETF has lost about -1.66% and is up roughly 10.11% so far this year and in the past one year (as of 01/24/2024), respectively. FNX has traded between $85.22 and $105.52 during this last 52-week period.
FNX has a beta of 1.22 and standard deviation of 21.43% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 451 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap ETF (VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard Mid-Cap ETF has $58.83 billion in assets, iShares Core S&P Mid-Cap ETF has $76.18 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
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 Blend.
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.