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If you’re interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the First Trust Small Cap Core AlphaDEX ETF (FYX), a passively managed exchange traded fund launched on 05/08/2007.
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.04 billion, 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.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
Investors should also pay attention to an ETF’s expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.61%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 0.67%.
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 23.10% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Dillard’s, Inc. (class A) (DDS) accounts for about 0.39% of total assets, followed by Calix, Inc. (CALX) and Genworth Financial, Inc. (GNW).
The top 10 holdings account for about 3.57% 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 added about 33.15% so far this year and it’s up approximately 45.60% in the last one year (as of 11/17/2021). In the past 52-week period, it has traded between $69.13 and $101.
The ETF has a beta of 1.35 and standard deviation of 31.82% for the trailing three-year period, making it a medium risk choice in the space. With about 526 holdings, it effectively diversifies company-specific risk.
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 SmallCap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $75.05 billion in assets, iShares Core S&P SmallCap ETF has $76.63 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
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 Small Cap Core AlphaDEX ETF (FYX): ETF Research Reports
Dillard’s, Inc. (DDS): Free Stock Analysis Report
Genworth Financial, Inc. (GNW): Free Stock Analysis Report
Calix, Inc (CALX): Free Stock Analysis Report
iShares Russell 2000 ETF (IWM): ETF Research Reports
iShares Core S&P SmallCap ETF (IJR): ETF Research Reports
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Zacks Investment Research