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Is First Trust Mid Cap Core AlphaDEX ETF (FNX) a Strong ETF Right Now?
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Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Mid Cap Core AlphaDEX ETF (FNX - Free Report) provides investors broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
FNX is managed by First Trust Advisors, and this fund has amassed over $1.15 billion, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund, 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.60% for FNX, making it one of the most expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.10%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
FNX's heaviest allocation is in the Industrials sector, which is about 21.60% of the portfolio. Its Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Ftai Aviation Ltd. (FTAI - Free Report) accounts for about 0.60% of total assets, followed by Carvana Co. (class A) (CVNA - Free Report) and Abercrombie & Fitch Co. (class A) (ANF - Free Report) .
Its top 10 holdings account for approximately 5.07% of FNX's total assets under management.
Performance and Risk
The ETF has added about 3.97% and was up about 10.39% so far this year and in the past one year (as of 08/07/2024), respectively. FNX has traded between $85.27 and $116.39 during this last 52-week period.
The fund has a beta of 1.20 and standard deviation of 21.12% for the trailing three-year period, which makes FNX a medium risk choice in this particular space. With about 447 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 $63.94 billion in assets, iShares Core S&P Mid-Cap ETF has $83.52 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?
Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Mid Cap Core AlphaDEX ETF (FNX - Free Report) provides investors broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
FNX is managed by First Trust Advisors, and this fund has amassed over $1.15 billion, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund, 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.60% for FNX, making it one of the most expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.10%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
FNX's heaviest allocation is in the Industrials sector, which is about 21.60% of the portfolio. Its Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Ftai Aviation Ltd. (FTAI - Free Report) accounts for about 0.60% of total assets, followed by Carvana Co. (class A) (CVNA - Free Report) and Abercrombie & Fitch Co. (class A) (ANF - Free Report) .
Its top 10 holdings account for approximately 5.07% of FNX's total assets under management.
Performance and Risk
The ETF has added about 3.97% and was up about 10.39% so far this year and in the past one year (as of 08/07/2024), respectively. FNX has traded between $85.27 and $116.39 during this last 52-week period.
The fund has a beta of 1.20 and standard deviation of 21.12% for the trailing three-year period, which makes FNX a medium risk choice in this particular space. With about 447 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 $63.94 billion in assets, iShares Core S&P Mid-Cap ETF has $83.52 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.