Designed to provide broad exposure to the Mid Cap Growth segment of the US equity market, the First Trust Mid Cap Growth AlphaDEX ETF (FNY) is a passively managed exchange traded fund launched on 04/19/2011.
The fund is sponsored by First Trust Advisors. It has amassed assets over $356.67 million, making it one of the average sized ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus, companies that fall under this category provide a stable and growth-heavy investment.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
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 0.70%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 0.56%.
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 Industrials sector--about 20.40% of the portfolio. Financials and Healthcare round out the top three.
Looking at individual holdings, Hims & Hers Health, Inc. (HIMS) accounts for about 0.99% of total assets, followed by Leonardo Drs, Inc. (DRS) and Duolingo, Inc. (DUOL).
The top 10 holdings account for about 8.7% of total assets under management.
Performance and Risk
FNY seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Growth Index before fees and expenses. The NASDAQ AlphaDEX Mid Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Growth Index.
The ETF has lost about -0.89% so far this year and is up about 9.14% in the last one year (as of 06/02/2025). In the past 52-week period, it has traded between $66.13 and $88.28.
The ETF has a beta of 1.17 and standard deviation of 21.91% for the trailing three-year period, making it a medium risk choice in the space. With about 226 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Mid Cap Growth AlphaDEX ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FNY is a great option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Mid-Cap Growth ETF (VOT) and the iShares Russell Mid-Cap Growth ETF (IWP) track a similar index. While Vanguard Mid-Cap Growth ETF has $16.06 billion in assets, iShares Russell Mid-Cap Growth ETF has $18.42 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.
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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First Trust Mid Cap Growth AlphaDEX ETF (FNY): ETF Research Reports iShares Russell Mid-Cap Growth ETF (IWP): ETF Research Reports Vanguard Mid-Cap Growth ETF (VOT): ETF Research Reports Hims & Hers Health, Inc. (HIMS): Free Stock Analysis Report Duolingo, Inc. (DUOL): Free Stock Analysis Report Leonardo DRS, Inc. (DRS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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