Should First Trust Small Cap Core AlphaDEX ETF (FYX) Be on Your Investing Radar?

Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the First Trust Small Cap Core AlphaDEX ETF (FYX) is a passively managed exchange traded fund launched on 05/08/2007.

The fund is sponsored by First Trust Advisors. It has amassed assets over $822.01 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.

Why Small Cap Blend

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.61%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 1.59%.

Sector Exposure and Top Holdings

ETFs offer a 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.

This ETF has heaviest allocation to the Financials sector--about 22.20% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Alignment Healthcare, Inc. (ALHC) accounts for about 0.57% of total assets, followed by Tg Therapeutics, Inc. (TGTX) and Dnow Inc. (DNOW).

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

Performance and Risk

FYX seeks to match the performance of the Nasdaq AlphaDEX Small Cap Core Index before fees and expenses. The NASDAQ AlphaDEX Small Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Index.

The ETF has lost about -6.04% so far this year and is up about 2.79% in the last one year (as of 05/19/2025). In the past 52-week period, it has traded between $79.22 and $110.53.

The ETF has a beta of 1.12 and standard deviation of 22.91% for the trailing three-year period, making it a medium risk choice in the space. With about 525 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Small Cap Core AlphaDEX ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FYX is a reasonable option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $64.30 billion in assets, iShares Core S&P Small-Cap ETF has $79.31 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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

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