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Is First Trust Multi Cap Growth AlphaDEX ETF (FAD) a Strong ETF Right Now?
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Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Multi Cap Growth AlphaDEX ETF (FAD - Free Report) provides investors broad exposure to the Style Box - All 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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
The fund is managed by First Trust Advisors, and has been able to amass over $201.05 million, which makes it one of the average sized ETFs in the Style Box - All Cap Growth. Before fees and expenses, this particular fund seeks to match the performance of the Nasdaq AlphaDEX Multi Cap Growth Index.
The NASDAQ AlphaDEX Multi Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Index, NASDAQ US 600 Mid Cap Index and NASDAQ US 700 Small Cap 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 0.64% for this ETF, which makes it on par with most peer products in the space.
FAD's 12-month trailing dividend yield is 0.36%.
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.
FAD's heaviest allocation is in the Industrials sector, which is about 25.20% of the portfolio. Its Information Technology and Consumer Discretionary round out the top three.
When you look at individual holdings, Super Micro Computer, Inc. (SMCI - Free Report) accounts for about 1.67% of the fund's total assets, followed by Nvidia Corporation (NVDA - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Its top 10 holdings account for approximately 6.57% of FAD's total assets under management.
Performance and Risk
Year-to-date, the First Trust Multi Cap Growth AlphaDEX ETF has added roughly 8.71% so far, and is up about 20.89% over the last 12 months (as of 06/11/2024). FAD has traded between $92.91 and $124.72 in this past 52-week period.
FAD has a beta of 1.11 and standard deviation of 20.39% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 677 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Multi Cap Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Morningstar Growth ETF (ILCG - Free Report) tracks MORNINGSTAR US LARGE-MID CP BRD GRWTH ID and the iShares Core S&P U.S. Growth ETF (IUSG - Free Report) tracks S&P 900 Growth Index. IShares Morningstar Growth ETF has $2.29 billion in assets, iShares Core S&P U.S. Growth ETF has $18.17 billion. ILCG has an expense ratio of 0.04% and IUSG charges 0.04%.
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 - All 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 Multi Cap Growth AlphaDEX ETF (FAD) a Strong ETF Right Now?
Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Multi Cap Growth AlphaDEX ETF (FAD - Free Report) provides investors broad exposure to the Style Box - All 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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
The fund is managed by First Trust Advisors, and has been able to amass over $201.05 million, which makes it one of the average sized ETFs in the Style Box - All Cap Growth. Before fees and expenses, this particular fund seeks to match the performance of the Nasdaq AlphaDEX Multi Cap Growth Index.
The NASDAQ AlphaDEX Multi Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Index, NASDAQ US 600 Mid Cap Index and NASDAQ US 700 Small Cap 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 0.64% for this ETF, which makes it on par with most peer products in the space.
FAD's 12-month trailing dividend yield is 0.36%.
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.
FAD's heaviest allocation is in the Industrials sector, which is about 25.20% of the portfolio. Its Information Technology and Consumer Discretionary round out the top three.
When you look at individual holdings, Super Micro Computer, Inc. (SMCI - Free Report) accounts for about 1.67% of the fund's total assets, followed by Nvidia Corporation (NVDA - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Its top 10 holdings account for approximately 6.57% of FAD's total assets under management.
Performance and Risk
Year-to-date, the First Trust Multi Cap Growth AlphaDEX ETF has added roughly 8.71% so far, and is up about 20.89% over the last 12 months (as of 06/11/2024). FAD has traded between $92.91 and $124.72 in this past 52-week period.
FAD has a beta of 1.11 and standard deviation of 20.39% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 677 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Multi Cap Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Morningstar Growth ETF (ILCG - Free Report) tracks MORNINGSTAR US LARGE-MID CP BRD GRWTH ID and the iShares Core S&P U.S. Growth ETF (IUSG - Free Report) tracks S&P 900 Growth Index. IShares Morningstar Growth ETF has $2.29 billion in assets, iShares Core S&P U.S. Growth ETF has $18.17 billion. ILCG has an expense ratio of 0.04% and IUSG charges 0.04%.
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 - All 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.