Is First Trust Mid Cap Value AlphaDEX ETF (FNK) a Strong ETF Right Now?

A smart beta exchange traded fund, the First Trust Mid Cap Value AlphaDEX ETF (FNK) debuted on 04/19/2011, and offers broad exposure to the Style Box - Mid Cap Value category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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 $202.54 million, this makes it one of the average sized ETFs in the Style Box - Mid Cap Value. FNK is managed by First Trust Advisors. 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.

Cost & Other Expenses

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.70%, making it one of the most expensive products in the space.

It's 12-month trailing dividend yield comes in at 1.51%.

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 24% of the portfolio, the fund has heaviest allocation to the Financials sector; Consumer Discretionary and Industrials round out the top three.

When you look at individual holdings, Alcoa Corporation (AA) accounts for about 0.97% of the fund's total assets, followed by Knight-swift Transportation Holdings Inc. (KNX) and Cnx Resources Corporation (CNX).

Its top 10 holdings account for approximately 8.85% of FNK's total assets under management.

Performance and Risk

So far this year, FNK has gained about 6.65%, and is up roughly 4.81% in the last one year (as of 12/18/2025). During this past 52-week period, the fund has traded between $43.24 and $57.19.

The fund has a beta of 1.05 and standard deviation of 20.34% for the trailing three-year period, which makes FNK a medium risk choice in this particular space. With about 226 holdings, it effectively diversifies company-specific risk .

Alternatives

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

iShares Russell Mid-Cap Value ETF (IWS) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE) tracks CRSP U.S. Mid Cap Value Index. iShares Russell Mid-Cap Value ETF has $14.26 billion in assets, Vanguard Mid-Cap Value ETF has $19.81 billion. IWS has an expense ratio of 0.23% and VOE changes 0.07%.

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 Value

Bottom Line

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research