A smart beta exchange traded fund, the First Trust Mid Cap Core AlphaDEX ETF (FNX) debuted on 05/08/2007, and offers broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $1.15 billion, this makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. FNX is managed by First Trust Advisors. This particular fund, 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.58% for this ETF, which makes it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.23%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 20.1% of the portfolio. Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Riot Platforms, Inc. (RIOT) accounts for about 0.58% of the fund's total assets, followed by Hims & Hers Health, Inc. (HIMS) and Fluor Corporation (FLR).
FNX's top 10 holdings account for about 4.95% of its total assets under management.
Performance and Risk
The ETF has added about 3.97% and is up about 6.85% so far this year and in the past one year (as of 08/20/2025), respectively. FNX has traded between $94.92 and $127.28 during this last 52-week period.
The fund has a beta of 1.10 and standard deviation of 20.62% for the trailing three-year period, which makes FNX a medium risk choice in this particular space. With about 451 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 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 Mid-Cap ETF has $86.4 billion in assets, iShares Core S&P Mid-Cap ETF has $97.78 billion. VO has an expense ratio of 0.04% 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
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 Core AlphaDEX ETF (FNX): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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