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Is First Trust Mid Cap Value AlphaDEX ETF (FNK) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust Mid Cap Value AlphaDEX ETF (FNK - Free Report) debuted on 04/19/2011, and offers broad exposure to the Style Box - Mid Cap Value 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FNK has been able to amass assets over $220.09 million, making it one of the smaller ETFs in the Style Box - Mid Cap Value. FNK seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Value Index before fees and expenses.
The NASDAQ AlphaDEX Mid Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Value 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 0.70% for this ETF, which makes it the most expensive product in the space.
It has a 12-month trailing dividend yield of 2.24%.
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.
Representing 21.70% of the portfolio, the fund has heaviest allocation to the Financials sector; Consumer Discretionary and Energy round out the top three.
Taking into account individual holdings, Urban Outfitters, Inc. (URBN - Free Report) accounts for about 0.96% of the fund's total assets, followed by New Fortress Energy Inc. (NFE - Free Report) and Expand Energy Corporation (EXE - Free Report) .
FNK's top 10 holdings account for about 8.33% of its total assets under management.
Performance and Risk
The ETF has added roughly 8.47% so far this year and is up about 10.25% in the last one year (as of 12/18/2024). In the past 52-week period, it has traded between $48.46 and $58.28.
The fund has a beta of 1.27 and standard deviation of 21.86% for the trailing three-year period, which makes FNK a medium risk choice in this particular space. With about 226 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Value AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell Mid-Cap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell Mid-Cap Value ETF has $13.73 billion in assets, Vanguard Mid-Cap Value ETF has $17.81 billion. IWS has an expense ratio of 0.23% and VOE 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 - Mid Cap Value.
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 Value AlphaDEX ETF (FNK) a Strong ETF Right Now?
A smart beta exchange traded fund, the First Trust Mid Cap Value AlphaDEX ETF (FNK - Free Report) debuted on 04/19/2011, and offers broad exposure to the Style Box - Mid Cap Value 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FNK has been able to amass assets over $220.09 million, making it one of the smaller ETFs in the Style Box - Mid Cap Value. FNK seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Value Index before fees and expenses.
The NASDAQ AlphaDEX Mid Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Value 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 0.70% for this ETF, which makes it the most expensive product in the space.
It has a 12-month trailing dividend yield of 2.24%.
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.
Representing 21.70% of the portfolio, the fund has heaviest allocation to the Financials sector; Consumer Discretionary and Energy round out the top three.
Taking into account individual holdings, Urban Outfitters, Inc. (URBN - Free Report) accounts for about 0.96% of the fund's total assets, followed by New Fortress Energy Inc. (NFE - Free Report) and Expand Energy Corporation (EXE - Free Report) .
FNK's top 10 holdings account for about 8.33% of its total assets under management.
Performance and Risk
The ETF has added roughly 8.47% so far this year and is up about 10.25% in the last one year (as of 12/18/2024). In the past 52-week period, it has traded between $48.46 and $58.28.
The fund has a beta of 1.27 and standard deviation of 21.86% for the trailing three-year period, which makes FNK a medium risk choice in this particular space. With about 226 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Value AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell Mid-Cap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell Mid-Cap Value ETF has $13.73 billion in assets, Vanguard Mid-Cap Value ETF has $17.81 billion. IWS has an expense ratio of 0.23% and VOE 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 - Mid Cap Value.
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.