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Should First Trust Mid Cap Core AlphaDEX ETF (FNX) Be on Your Investing Radar?

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Launched on 05/08/2007, the First Trust Mid Cap Core AlphaDEX ETF (FNX - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Mid Cap Blend segment of the US equity market.

The fund is sponsored by First Trust Advisors. It has amassed assets over $1.16 billion, making it one of the average sized ETFs attempting to match the Mid Cap Blend segment of the US equity market.

Why Mid Cap Blend

Mid cap companies, with market capitalization in the range of $2 billion and $10 billion, offer investors many things that small and large companies don't, including less risk and higher growth opportunities. Thus, companies that fall under this category provide a stable and growth-heavy investment.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.60%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 0.97%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 19.50% of the portfolio. Consumer Discretionary and Financials round out the top three.

Looking at individual holdings, Microstrategy Incorporated (MSTR - Free Report) accounts for about 0.60% of total assets, followed by Vertiv Group Corp (VRT - Free Report) and Carvana Co. (class A) (CVNA - Free Report) .

The top 10 holdings account for about 5.11% of total assets under management.

Performance and Risk

FNX seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Core Index before fees and expenses. 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.

The ETF has added about 4.33% so far this year and it's up approximately 23.96% in the last one year (as of 05/30/2024). In the past 52-week period, it has traded between $85.27 and $113.37.

The ETF has a beta of 1.21 and standard deviation of 20.95% for the trailing three-year period, making it 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 carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FNX is a sufficient option for those seeking exposure to the Style Box - Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Mid-Cap ETF (VO - Free Report) and the iShares Core S&P Mid-Cap ETF (IJH - Free Report) track a similar index. While Vanguard Mid-Cap ETF has $63.25 billion in assets, iShares Core S&P Mid-Cap ETF has $82.27 billion. VO has an expense ratio of 0.04% and IJH 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.

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