Is First Trust Small Cap Core AlphaDEX ETF (FYX) a Strong ETF Right Now?
The First Trust Small Cap Core AlphaDEX ETF (FYX) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small 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.
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.
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.
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
FYX is managed by First Trust Advisors, and this fund has amassed over $768.43 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund seeks to match the performance of the Nasdaq AlphaDEX Small Cap Core Index before fees and expenses.
The NASDAQ AlphaDEX Small Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Index.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for FYX are 0.61%, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.74%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 22.10% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Alignment Healthcare, Inc. (ALHC) accounts for about 0.57% of the fund's total assets, followed by Tg Therapeutics, Inc. (TGTX) and Dnow Inc. (DNOW).
FYX's top 10 holdings account for about 4.42% of its total assets under management.
Performance and Risk
So far this year, FYX has lost about -13.97%, and is down about -0.40% in the last one year (as of 04/28/2025). During this past 52-week period, the fund has traded between $79.22 and $110.53.
The ETF has a beta of 1.16 and standard deviation of 23.16% for the trailing three-year period, making it a medium risk choice in the space. With about 525 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Small Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $59.47 billion in assets, iShares Core S&P Small-Cap ETF has $73.73 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
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 - Small 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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First Trust Small Cap Core AlphaDEX ETF (FYX): ETF Research Reports
TG Therapeutics, Inc. (TGTX) : Free Stock Analysis Report
iShares Russell 2000 ETF (IWM): ETF Research Reports
DNOW Inc. (DNOW) : Free Stock Analysis Report
iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports
Alignment Healthcare, Inc. (ALHC) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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