Should First Trust Small Cap Value AlphaDEX ETF (FYT) Be on Your Investing Radar?

The First Trust Small Cap Value AlphaDEX ETF (FYT) was launched on April 19, 2011, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Value segment of the US equity market.

The fund is sponsored by First Trust Advisors. It has amassed assets over $201.93 million, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.

Why Small Cap Value

Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.

While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.

Costs

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 counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.7%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 1.4%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector -- about 25.9% of the portfolio. Consumer Discretionary and Energy round out the top three.

Looking at individual holdings, Par Pacific Holdings, Inc. (PARR) accounts for about 0.79% of total assets, followed by Dorian Lpg Ltd. (LPG) and Pbf Energy Inc. (PBF).

The top 10 holdings account for about 7.21% of total assets under management.

Performance and Risk

FYT seeks to match the performance of the Nasdaq AlphaDEX Small Cap Value Index before fees and expenses. The NASDAQ AlphaDEX Small Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Value Index.

The ETF has gained about 30.51% so far this year and it's up approximately 34.74% in the last one year (as of 08/14/2026). In the past 52-week period, it has traded between $52.47 and $73.66.

The ETF has a beta of 0.97 and standard deviation of 21% for the trailing three-year period, making it a high risk choice in the space. With about 263 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Small Cap Value AlphaDEX ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FYT is an excellent option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 2000 Value ETF (IWN) and the Vanguard Morningstar Small-Cap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $14.74 billion in assets, Vanguard Morningstar Small-Cap Value ETF has $38.24 billion. IWN has an expense ratio of 0.24% and VBR charges 0.05%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

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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This article originally published on Zacks Investment Research (zacks.com).

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