The First Trust Multi Cap Growth AlphaDEX ETF (FAD) was launched on 05/08/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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
Because the fund has amassed over $325.33 million, this makes it one of the average sized ETFs in the Style Box - All Cap Growth. FAD is managed by First Trust Advisors. FAD, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Multi Cap Growth Index.
The NASDAQ AlphaDEX Multi Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Index, NASDAQ US 600 Mid Cap Index and NASDAQ US 700 Small Cap 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.
Annual operating expenses for this ETF are 0.62%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.49%.
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.
Representing 20% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Information Technology round out the top three.
When you look at individual holdings, Palantir Technologies Inc. (class A) (PLTR) accounts for about 0.6% of the fund's total assets, followed by Comfort Systems Usa, Inc. (FIX) and Robinhood Markets, Inc. (class A) (HOOD).
The top 10 holdings account for about 5.36% of total assets under management.
Performance and Risk
So far this year, FAD has added roughly 12.04%, and is up about 20.52% in the last one year (as of 08/27/2025). During this past 52-week period, the fund has traded between $114.67 and $154.78.
The ETF has a beta of 1.13 and standard deviation of 19.25% for the trailing three-year period, making it a medium risk choice in the space. With about 677 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Multi Cap Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
iShares Morningstar Growth ETF (ILCG) tracks MORNINGSTAR US LARGE-MID CP BRD GRWTH ID and the iShares Core S&P U.S. Growth ETF (IUSG) tracks S&P 900 Growth Index. iShares Morningstar Growth ETF has $2.94 billion in assets, iShares Core S&P U.S. Growth ETF has $24.42 billion. ILCG has an expense ratio of 0.04% and IUSG changes 0.04%.
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 - All 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 Multi Cap Growth AlphaDEX ETF (FAD): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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