Is First Trust Mid Cap Core AlphaDEX ETF (FNX) a Strong ETF Right Now?

The First Trust Mid Cap Core AlphaDEX ETF (FNX) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Mid Cap Blend category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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.

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

The fund is managed by First Trust Advisors, and has been able to amass over $1.37 billion, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. FNX, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Core Index.

The NASDAQ AlphaDEX Mid Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Index.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.62% for this ETF, which makes it one of the most expensive products in the space.

It's 12-month trailing dividend yield comes in at 0.82%.

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.

For FNX, it has heaviest allocation in the Financials sector --about 19.5% of the portfolio --while Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Lithia Motors, Inc. (LAD) accounts for about 0.47% of total assets, followed by Genpact Limited (G) and Epam Systems, Inc. (EPAM).

The top 10 holdings account for about 4.42% of total assets under management.

Performance and Risk

Year-to-date, the First Trust Mid Cap Core AlphaDEX ETF has gained about 13.43% so far, and was up about 15.86% over the last 12 months (as of 09/02/2026). FNX has traded between $117.48 $147.95 in this past 52-week period.

The fund has a beta of 1.05 and standard deviation of 18.38% for the trailing three-year period, which makes FNX a medium risk choice in this particular space. With about 452 holdings, it effectively diversifies company-specific risk .

Alternatives

First Trust Mid Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard Morningstar Mid-Cap ETF (VO) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH) tracks S&P MidCap 400 Index. Vanguard Morningstar Mid-Cap ETF has $107.06 billion in assets, iShares Core S&P Mid-Cap ETF has $123.59 billion. VO has an expense ratio of 0.03% and IJH changes 0.05%.

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 Blend

Bottom Line

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

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