A smart beta exchange traded fund, the First Trust Small Cap Core AlphaDEX ETF (FYX) debuted on 05/08/2007, and offers broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.04 billion, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Small Cap Core Index.
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.
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.
Annual operating expenses for this ETF are 0.58%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.61%.
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.
For FYX, it has heaviest allocation in the Financials sector --about 18.8% of the portfolio --while Industrials and Healthcare round out the top three.
When you look at individual holdings, Arcbest Corporation (ARCB) accounts for about 0.44% of the fund's total assets, followed by Brookdale Senior Living Inc. (BKD) and Lgi Homes, Inc. (LGIH).
The top 10 holdings account for about 4.01% of total assets under management.
Performance and Risk
The ETF return is roughly 5.15% and it's up approximately 31.97% so far this year and in the past one year (as of 03/12/2026), respectively. FYX has traded between $79.22 and $124.85 during this last 52-week period.
FYX has a beta of 1.07 and standard deviation of 20.79% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 526 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Small Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Small-Cap Index Fund ETF Shares (VB) tracks CRSP US Small Cap Index and the iShares Core S&P Small-Cap ETF (IJR) tracks S&P SmallCap 600 Index. Vanguard Small-Cap Index Fund ETF Shares has $71.45 billion in assets, iShares Core S&P Small-Cap ETF has $92.01 billion. VB has an expense ratio of 0.03% and IJR changes 0.06%.
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 - Small Cap Blend
Bottom Line
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First Trust Small Cap Core AlphaDEX ETF (FYX): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).