Is First Trust Mid Cap Growth AlphaDEX ETF (FNY) a Strong ETF Right Now?
Smart Beta ETF report for FNY
Launched on 04/19/2011, the First Trust Mid Cap Growth AlphaDEX ETF (FNY) is a smart beta exchange traded fund offering broad exposure to the Style Box - Mid 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
Because the fund has amassed over $472.65 million, this makes it one of the average sized ETFs in the Style Box - Mid Cap Growth. FNY is managed by First Trust Advisors. FNY, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Growth Index.
The NASDAQ AlphaDEX Mid Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Growth Index.
Cost & Other Expenses
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 0.70%, making it one of the most expensive products in the space.
FNY's 12-month trailing dividend yield is 0.21%.
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.
For FNY, it has heaviest allocation in the Information Technology sector --about 20.50% of the portfolio --while Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Amc Entertainment Holdings, Inc. (class A) (AMC) accounts for about 4.10% of total assets, followed by Shockwave Medical, Inc. (SWAV) and Crocs, Inc. (CROX).
FNY's top 10 holdings account for about 11.9% of its total assets under management.
Performance and Risk
The ETF return is roughly 16.72% and it's up approximately 41.35% so far this year and in the past one year (as of 08/31/2021), respectively. FNY has traded between $50.38 and $75.64 during this last 52-week period.
The ETF has a beta of 1.14 and standard deviation of 26.94% for the trailing three-year period, making it a medium risk choice in the space. With about 226 holdings, it effectively diversifies company-specific risk.
First Trust Mid Cap Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard MidCap Growth ETF (VOT) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell MidCap Growth ETF (IWP) tracks Russell MidCap Growth Index. Vanguard MidCap Growth ETF has $11.85 billion in assets, iShares Russell MidCap Growth ETF has $16.49 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.
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 Growth.
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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First Trust Mid Cap Growth AlphaDEX ETF (FNY): ETF Research Reports
Crocs, Inc. (CROX): Free Stock Analysis Report
AMC Entertainment Holdings, Inc. (AMC): Free Stock Analysis Report
iShares Russell MidCap Growth ETF (IWP): ETF Research Reports
Vanguard MidCap Growth ETF (VOT): ETF Research Reports
ShockWave Medical, Inc. (SWAV): Free Stock Analysis Report
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