If you're interested in broad exposure to the Mid Cap Growth segment of the US equity market, look no further than the First Trust Mid Cap Growth AlphaDEX Fund (FNY), a passively managed exchange traded fund launched on 04/19/2011.
The fund is sponsored by First Trust Advisors. It has amassed assets over $254.85 M, making it the smallest ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. Thus they have a nice balance of growth potential and stability.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. 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.
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 the most expensive products in the space.
It has a 12-month trailing dividend yield of 0.05%.
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 Information Technology sector--about 26.40% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Okta, Inc. (OKTA) accounts for about 0.98% of total assets, followed by Coupa Software Incorporated (COUP) and Dell Technologies Inc. (class C) (DELL).
The top 10 holdings account for about 8.62% 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 gained about 21.31% so far this year and is down about -0.29% in the last one year (as of 06/06/2019). In the past 52-week period, it has traded between $33.42 and $47.12.
The ETF has a beta of 1.13 and standard deviation of 16.42% for the trailing three-year period, making it a medium risk choice in the space. With about 225 holdings, it effectively diversifies company-specific risk.
First Trust Mid Cap Growth AlphaDEX Fund holds a Zacks ETF Rank of 1 (Strong 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 iShares S&P Mid-Cap 400 Growth ETF (IJK) and the iShares Russell Mid-Cap Growth ETF (IWP) track a similar index. While iShares S&P Mid-Cap 400 Growth ETF has $7.44 B in assets, iShares Russell Mid-Cap Growth ETF has $10.51 B. IJK has an expense ratio of 0.25% and IWP charges 0.25%.
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 Growth AlphaDEX Fund (FNY): ETF Research Reports
COUPA SOFTWARE (COUP) : Free Stock Analysis Report
Dell Technologies Inc. (DELL) : Free Stock Analysis Report
iShares Russell Mid-Cap Growth ETF (IWP): ETF Research Reports
Okta, Inc. (OKTA) : Free Stock Analysis Report
iShares S&P Mid-Cap 400 Growth ETF (IJK): ETF Research Reports
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