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?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.
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
FNX is managed by First Trust Advisors, and this fund has amassed over $1.02 billion, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. FNX seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Core Index before fees and expenses.
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.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.58%.
The fund has a 12-month trailing dividend yield of 1.53%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FNX, it has heaviest allocation in the Financials sector --about 19.90% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Hims & Hers Health, Inc. (HIMS) accounts for about 0.65% of the fund's total assets, followed by Exelixis, Inc. (EXEL) and Sprouts Farmers Market, Inc. (SFM).
The top 10 holdings account for about 4.47% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Mid Cap Core AlphaDEX ETF has lost about -12.22% so far, and is down about -3.04% over the last 12 months (as of 04/16/2025). FNX has traded between $94.92 and $127.28 in this past 52-week period.
The fund has a beta of 1.13 and standard deviation of 22.01% 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 $70.12 billion in assets, iShares Core S&P Mid-Cap ETF has $83.97 billion. VO has an expense ratio of 0.04% and IJH charges 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 Reports Exelixis, Inc. (EXEL): Free Stock Analysis Report Sprouts Farmers Market, Inc. (SFM): Free Stock Analysis Report iShares Core S&P Mid-Cap ETF (IJH): ETF Research Reports Vanguard Mid-Cap ETF (VO): ETF Research Reports Hims & Hers Health, Inc. (HIMS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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