Launched on 04/19/2011, the First Trust Mid Cap Growth AlphaDEX ETF (FNY) is a passively managed exchange traded fund designed to provide a broad exposure to the Mid Cap Growth segment of the US equity market.
The fund is sponsored by First Trust Advisors. It has amassed assets over $431.70 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 they have a nice balance of growth potential and stability.
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. Additionally, growth stocks have a greater level of risk associated with them. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.
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 0.22%.
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.
This ETF has heaviest allocation to the Healthcare sector--about 20.20% of the portfolio. Information Technology and Consumer Discretionary round out the top three.
Looking at individual holdings, Amc Entertainment Holdings, Inc. (class A) (AMC) accounts for about 4.10% of total assets, followed by Shockwave Medical, Inc. (NASDAQ:SWAV) and Crocs, Inc. (NASDAQ:CROX).
The top 10 holdings account for about 11.9% 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 added roughly 13.18% so far this year and it's up approximately 49.56% in the last one year (as of 07/09/2021). In the past 52-week period, it has traded between $47.49 and $75.64.
The ETF has a beta of 1.14 and standard deviation of 26.76% 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 carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FNY is a sufficient option for those seeking exposure to the Style Box - Mid Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard MidCap Growth ETF (VOT) and the iShares Russell MidCap Growth ETF (IWP) track a similar index. While Vanguard MidCap Growth ETF has $11.20 billion in assets, iShares Russell MidCap Growth ETF has $15.66 billion. VOT has an expense ratio of 0.07% and IWP charges 0.24%.
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.
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
First Trust Mid Cap Growth AlphaDEX ETF (FNY): ETF Research Reports
Crocs, Inc. (CROX): Free Stock Analysis Report
AMC Entertainment Holdings, Inc. (NYSE:AMC): Free Stock Analysis Report
iShares Russell MidCap Growth ETF (IWP): ETF Research Reports
Vanguard MidCap Growth ETF (VOT): ETF Research Reports
ShockWave Medical, Inc. (SWAV): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research