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?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FNY has been able to amass assets over $377.71 million, making it one of the average sized ETFs in the Style Box - Mid Cap Growth. This particular fund seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Growth Index before fees and expenses.
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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.70%.
It's 12-month trailing dividend yield comes in at 0.55%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Industrials sector - about 21.30% of the portfolio. Financials and Healthcare round out the top three.
Looking at individual holdings, Affirm Holdings, Inc. (class A) (AFRM) accounts for about 1.18% of total assets, followed by Sofi Technologies, Inc. (SOFI) and Hims & Hers Health, Inc. (HIMS).
FNY's top 10 holdings account for about 9.56% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust Mid Cap Growth AlphaDEX ETF has added about 1.73% so far, and is up roughly 22.94% over the last 12 months (as of 01/09/2025). FNY has traded between $65.71 and $88.28 in this past 52-week period.
The ETF has a beta of 1.16 and standard deviation of 22.13% 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.
Alternatives
First Trust Mid Cap Growth AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Mid-Cap Growth ETF (VOT) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell Mid-Cap Growth ETF (IWP) tracks Russell MidCap Growth Index. Vanguard Mid-Cap Growth ETF has $15.40 billion in assets, iShares Russell Mid-Cap Growth ETF has $17.84 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.
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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First Trust Mid Cap Growth AlphaDEX ETF (FNY): ETF Research Reports
iShares Russell Mid-Cap Growth ETF (IWP): ETF Research Reports
Vanguard Mid-Cap Growth ETF (VOT): ETF Research Reports
Affirm Holdings, Inc. (AFRM) : Free Stock Analysis Report
Hims & Hers Health, Inc. (HIMS) : Free Stock Analysis Report
SoFi Technologies, Inc. (SOFI) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
