A smart beta exchange traded fund, the First Trust Mid Cap Growth AlphaDEX ETF (FNY) debuted on 04/19/2011, and offers 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.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 $600.82 million, this makes it one of the average sized ETFs in the Style Box - Mid Cap Growth. FNY is managed by First Trust Advisors. Before fees and expenses, FNY 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.73% for FNY, making it one of the more expensive products in the space.
FNY's 12-month trailing dividend yield is 0.00%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 23.9% of the portfolio. Healthcare and Information Technology round out the top three.
Looking at individual holdings, Guardant Health, Inc. (GH) accounts for about 0.81% of total assets, followed by Tg Therapeutics, Inc. (TGTX) and Pacs Group, Inc. (PACS).
FNY's top 10 holdings account for about 7.86% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust Mid Cap Growth AlphaDEX ETF has gained about 16.46% so far, and it's up approximately 26.38% over the last 12 months (as of 08/05/2026). FNY has traded between $83.39 $110.85 in this past 52-week period.
The fund has a beta of 1.19 and standard deviation of 20.77% for the trailing three-year period, which makes FNY a medium risk choice in this particular space. With about 226 holdings, it effectively diversifies company-specific risk .
Alternatives
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 Mid-Cap Growth Index Fund ETF Shares (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 Index Fund ETF Shares has $20.03 billion in assets, iShares Russell Mid-Cap Growth ETF has $20.65 billion. VOT has an expense ratio of 0.05% and IWP changes 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 ReportsThis article originally published on Zacks Investment Research (zacks.com).
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