If you're interested in broad exposure to the Mid Cap Value segment of the US equity market, look no further than the First Trust Mid Cap Value AlphaDEX ETF (FNK), a passively managed exchange traded fund launched on 04/19/2011.
The fund is sponsored by First Trust Advisors. It has amassed assets over $200.07 million, making it one of the smaller ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
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 they have a nice balance of growth potential and stability.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 1.84%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 21.70% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Riot Platforms, Inc. (RIOT) accounts for about 0.90% of total assets, followed by Tenet Healthcare Corporation (THC) and Pvh Corp. (PVH).
The top 10 holdings account for about 8.08% of total assets under management.
Performance and Risk
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.
The ETF has lost about -3.82% so far this year and it's up approximately 3.88% in the last one year (as of 06/17/2025). In the past 52-week period, it has traded between $43.24 and $58.28.
The ETF has a beta of 1.07 and standard deviation of 22.17% 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 Value 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, FNK is a good option for those seeking exposure to the Style Box - Mid Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell Mid-Cap Value ETF (IWS) and the Vanguard Mid-Cap Value ETF (VOE) track a similar index. While iShares Russell Mid-Cap Value ETF has $13.05 billion in assets, Vanguard Mid-Cap Value ETF has $17.63 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
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 Value AlphaDEX ETF (FNK): ETF Research Reports Tenet Healthcare Corporation (THC): Free Stock Analysis Report PVH Corp. (PVH): Free Stock Analysis Report Vanguard Mid-Cap Value ETF (VOE): ETF Research Reports iShares Russell Mid-Cap Value ETF (IWS): ETF Research Reports Riot Platforms, Inc. (RIOT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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