A smart beta exchange traded fund, the First Trust Multi Cap Growth AlphaDEX ETF (FAD) debuted on 05/08/2007, and offers broad exposure to the Style Box - All Cap Growth category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
FAD is managed by First Trust Advisors, and this fund has amassed over $562.8 million, which makes it one of the average sized ETFs in the Style Box - All Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Multi Cap Growth Index.
The NASDAQ AlphaDEX Multi Cap Growth Index is an enhanced which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Index, NASDAQ US 600 Mid Cap Index and NASDAQ US 700 Small Cap Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.63% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.09%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Representing 25.6% of the portfolio, the fund has heaviest allocation to the Industrials sector; Information Technology and Healthcare round out the top three.
When you look at individual holdings, Seagate Technology Holdings Plc (STX) accounts for about 0.74% of the fund's total assets, followed by Vertiv Holdings Co (class A) (VRT) and Mastec, Inc. (MTZ).
FAD's top 10 holdings account for about 6.39% of its total assets under management.
Performance and Risk
So far this year, FAD has gained about 17.74%, and was up about 29.08% in the last one year (as of 07/13/2026). During this past 52-week period, the fund has traded between $146.53 and $199.97.
The fund has a beta of 1.15 and standard deviation of 19.25% for the trailing three-year period, which makes FAD a medium risk choice in this particular space. With about 677 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Multi Cap Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
iShares Morningstar Growth ETF (ILCG) tracks MORNINGSTAR US LARGE-MID CP BRD GRWTH ID and the iShares Core S&P U.S. Growth ETF (IUSG) tracks S&P 900 Growth Index. iShares Morningstar Growth ETF has $3.23 billion in assets, iShares Core S&P U.S. Growth ETF has $32.4 billion. ILCG has an expense ratio of 0.04% and IUSG changes 0.04%.
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 - All Cap Growth
Bottom Line
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First Trust Multi Cap Growth AlphaDEX ETF (FAD): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).