The First Trust Mid Cap Value AlphaDEX ETF (FNK) made its debut on 04/19/2011, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $221.27 million, this makes it one of the average sized ETFs in the Style Box - Mid Cap Value. FNK is managed by First Trust Advisors. Before fees and expenses, FNK seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Value Index.
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.
Cost & Other Expenses
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 cousins, other things remaining the same.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.74%.
It has a 12-month trailing dividend yield of 1.47%.
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.
FNK's heaviest allocation is in the Financials sector, which is about 25.6% of the portfolio. Its Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Apa Corporation (APA) accounts for about 1.26% of total assets, followed by Chord Energy Corporation (CHRD) and Ovintiv Inc. (OVV).
FNK's top 10 holdings account for about 10.62% of its total assets under management.
Performance and Risk
So far this year, FNK has added about 11.59%, and is up about 16.26% in the last one year (as of 07/03/2026). During this past 52-week period, the fund has traded between $51.66 and $61.78.
The fund has a beta of 0.96 and standard deviation of 18.82% for the trailing three-year period, which makes FNK a medium risk choice in this particular space. With about 226 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Mid Cap Value AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
iShares Russell Mid-Cap Value ETF (IWS) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) tracks CRSP U.S. Mid Cap Value Index. iShares Russell Mid-Cap Value ETF has $15.74 billion in assets, Vanguard Mid-Cap Value Index Fund ETF Shares has $23.18 billion. IWS has an expense ratio of 0.23% and VOE changes 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Value
Bottom Line
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First Trust Mid Cap Value AlphaDEX ETF (FNK): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).