Designed to provide broad exposure to the Mid Cap Growth segment of the US equity market, the First Trust Mid Cap Growth AlphaDEX Fund (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 $229.32 M, 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
Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. These types of companies, then, have a good balance of stability and growth potential.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Also, growth stocks are a type of equity that carries more risk compared to others. 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.
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 0.11%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 20.10% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Tractor Supply Company (TSCO) accounts for about 0.81% of total assets, followed by Tetra Tech, Inc. (TTEK) and Nexstar Media Group, Inc. (NXST).
The top 10 holdings account for about 7.87% 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 4.49% so far this year and it's up approximately 7.12% in the last one year (as of 11/06/2018). In the past 52-week period, it has traded between $37.73 and $47.12.
The ETF has a beta of 1.05 and standard deviation of 14.76% 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 an excellent option for investors seeking exposure to the Mid Cap ETFs 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 $7.46 B in assets, iShares Russell Mid-Cap Growth ETF has $8.63 B. IJK has an expense ratio of 0.25% and IWP charges 0.25%.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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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FT-MC GROWTH AD (FNY): ETF Research Reports
Nexstar Broadcasting Group, Inc. (NXST) : Free Stock Analysis Report
ISHARS-RS M GR (IWP): ETF Research Reports
Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report
Tractor Supply Company (TSCO) : Free Stock Analysis Report
ISHARS-SP MC GR (IJK): ETF Research Reports
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