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Is First Trust Small Cap Growth AlphaDEX ETF (FYC) a Strong ETF Right Now?
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The First Trust Small Cap Growth AlphaDEX ETF (FYC - 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 - Small Cap Growth category of the market.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.
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
Managed by First Trust Advisors, FYC has amassed assets over $274.05 million, making it one of the average sized ETFs in the Style Box - Small Cap Growth. Before fees and expenses, FYC seeks to match the performance of the Nasdaq AlphaDEX Small Cap Growth Index.
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.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.70% for FYC, making it one of the most expensive products in the space.
FYC's 12-month trailing dividend yield is 0.46%.
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.
FYC's heaviest allocation is in the Industrials sector, which is about 25.10% of the portfolio. Its Information Technology and Consumer Discretionary round out the top three.
Looking at individual holdings, Hims & Hers Health, Inc. (HIMS - Free Report) accounts for about 1.05% of total assets, followed by Oscar Health, Inc. (class A) (OSCR - Free Report) and Modine Manufacturing Company (MOD - Free Report) .
Its top 10 holdings account for approximately 8.56% of FYC's total assets under management.
Performance and Risk
So far this year, FYC has added roughly 6.02%, and is up about 19.97% in the last one year (as of 05/15/2024). During this past 52-week period, the fund has traded between $51.50 and $66.71.
The ETF has a beta of 1.18 and standard deviation of 23.81% 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 is a reasonable option for investors seeking to outperform the Style Box - Small Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 Growth ETF (IWO - Free Report) tracks Russell 2000 Growth Index and the Vanguard Small-Cap Growth ETF (VBK - Free Report) tracks CRSP U.S. Small Cap Growth Index. IShares Russell 2000 Growth ETF has $10.97 billion in assets, Vanguard Small-Cap Growth ETF has $17.02 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.
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 - Small 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 Small Cap Growth AlphaDEX ETF (FYC) a Strong ETF Right Now?
The First Trust Small Cap Growth AlphaDEX ETF (FYC - 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 - Small Cap Growth category of the market.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.
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
Managed by First Trust Advisors, FYC has amassed assets over $274.05 million, making it one of the average sized ETFs in the Style Box - Small Cap Growth. Before fees and expenses, FYC seeks to match the performance of the Nasdaq AlphaDEX Small Cap Growth Index.
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.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.70% for FYC, making it one of the most expensive products in the space.
FYC's 12-month trailing dividend yield is 0.46%.
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.
FYC's heaviest allocation is in the Industrials sector, which is about 25.10% of the portfolio. Its Information Technology and Consumer Discretionary round out the top three.
Looking at individual holdings, Hims & Hers Health, Inc. (HIMS - Free Report) accounts for about 1.05% of total assets, followed by Oscar Health, Inc. (class A) (OSCR - Free Report) and Modine Manufacturing Company (MOD - Free Report) .
Its top 10 holdings account for approximately 8.56% of FYC's total assets under management.
Performance and Risk
So far this year, FYC has added roughly 6.02%, and is up about 19.97% in the last one year (as of 05/15/2024). During this past 52-week period, the fund has traded between $51.50 and $66.71.
The ETF has a beta of 1.18 and standard deviation of 23.81% 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 is a reasonable option for investors seeking to outperform the Style Box - Small Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 Growth ETF (IWO - Free Report) tracks Russell 2000 Growth Index and the Vanguard Small-Cap Growth ETF (VBK - Free Report) tracks CRSP U.S. Small Cap Growth Index. IShares Russell 2000 Growth ETF has $10.97 billion in assets, Vanguard Small-Cap Growth ETF has $17.02 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.
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 - Small 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.