Designed to provide broad exposure to the Style Box - Mid Cap Blend category of the market, the First Trust Mid Cap Core AlphaDEX ETF (FNX) is a smart beta exchange traded fund launched on 05/08/2007.
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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of 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 managed by First Trust Advisors. FNX has been able to amass assets over $1.42 billion, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Core Index before fees and expenses.
The NASDAQ AlphaDEX Mid Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Index.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.62% for FNX, making it one of the most expensive products in the space.
FNX's 12-month trailing dividend yield is 0.80%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 21.7% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Lumentum Holdings Inc. (LITE) accounts for about 0.76% of the fund's total assets, followed by Ciena Corporation (CIEN) and Apa Corporation (APA).
Its top 10 holdings account for approximately 5.87% of FNX's total assets under management.
Performance and Risk
So far this year, FNX return is roughly 16.63%, and is up roughly 28.44% in the last one year (as of 07/01/2026). During this past 52-week period, the fund has traded between $115.08 and $146.35.
The ETF has a beta of 1.06 and standard deviation of 18.48% for the trailing three-year period, making it a medium risk choice in the space. With about 451 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Mid Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap Index Fund ETF Shares (VO) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH) tracks S&P MidCap 400 Index. Vanguard Mid-Cap Index Fund ETF Shares has $105.16 billion in assets, iShares Core S&P Mid-Cap ETF has $124.46 billion. VO has an expense ratio of 0.03% and IJH 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 Blend
Bottom Line
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First Trust Mid Cap Core AlphaDEX ETF (FNX): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).