Should First Trust Mid Cap Value AlphaDEX ETF (FNK) Be on Your Investing Radar?

Designed to provide broad exposure to the Mid Cap Value segment of the US equity market, the First Trust Mid Cap Value AlphaDEX ETF (FNK) is a passively managed exchange traded fund launched on April 19, 2011.

The fund is sponsored by First Trust Advisors. It has amassed assets over $231.80 million, making it one of the average sized ETFs attempting to match the Mid Cap Value segment of the US equity market.

Why Mid Cap Value

Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. These types of companies, then, have a good balance of stability and growth potential.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth 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 0.74%, making it one of the most 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 24.9% of the portfolio. Consumer Discretionary and Energy round out the top three.

Looking at individual holdings, Hf Sinclair Corp. (DINO) accounts for about 0.84% of total assets, followed by Sm Energy Company (SM) and Cf Industries Holdings, Inc. (CF).

The top 10 holdings account for about 8.01% of total assets under management.

Performance and Risk

FNK seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Value Index before fees and expenses. The NASDAQ AlphaDEX Mid Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Value Index.

The ETF has gained about 16.53% so far this year and is up about 20.7% in the last one year (as of 08/21/2026). In the past 52-week period, it has traded between $51.98 and $64.77.

The ETF has a beta of 0.96 and standard deviation of 18.7% 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 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, FNK is a great option for investors seeking exposure to the Style Box - Mid Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell Mid-Cap Value ETF (IWS) and the Vanguard Morningstar Mid-Cap Value ETF (VOE) track a similar index. While iShares Russell Mid-Cap Value ETF has $15.82 billion in assets, Vanguard Morningstar Mid-Cap Value ETF has $24.31 billion. IWS has an expense ratio of 0.23% and VOE 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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