Is First Trust Small Cap Growth AlphaDEX ETF a Strong ETF Choice?

The First Trust Small Cap Growth AlphaDEX ETF (FYC) is a smart beta ETF launched on 04/19/2011, designed to track the Nasdaq AlphaDEX Small Cap Growth Index. The fund has amassed over $457.6 million and charges an annual operating expense of 0.71%. It has a 12-month trailing dividend yield of 0.61% and heaviest allocation in the Financials sector, with holdings including Sezzle Inc., Dave Inc., and Centrus Energy Corp.

The First Trust Small Cap Growth AlphaDEX ETF (FYC) is a smart beta exchange-traded fund (ETF) launched on April 19, 2011, designed to track the Nasdaq AlphaDEX Small Cap Growth Index. As of July 2, 2025, the fund has amassed over $457.6 million in assets under management and charges an annual operating expense of 0.71%. The ETF has a 12-month trailing dividend yield of 0.61% and is heavily allocated to the Financials sector, with notable holdings including Sezzle Inc. (SEZL), Dave Inc. (class A) (DAVE), and Centrus Energy Corp. (class A) (LEU).

Performance and Risk

As of July 2, 2025, the First Trust Small Cap Growth AlphaDEX ETF (FYC) has gained approximately 3.35% year-to-date and has seen a 13.91% increase over the last 12 months. The ETF's beta of 1.16 and standard deviation of 22.33% over the trailing three-year period indicate a high level of risk, making it suitable for investors seeking higher potential returns but willing to accept higher volatility.

Sector Exposure and Top Holdings

The ETF's top sector allocation is Financials, which accounts for approximately 21.9% of the portfolio. Industrials and Healthcare sectors follow, rounding out the top three. The fund's top 10 holdings account for about 12.34% of total assets under management, providing diversification and mitigating risk associated with individual company performance.

Institutional Holdings and Fund Management

Several institutional investors have recently modified their holdings in the First Trust Small Cap Growth AlphaDEX ETF (FYC). For instance, JPMorgan Chase & Co. bought a new position worth approximately $31,000 in the fourth quarter, and Northwestern Mutual Wealth Management Co. raised its position by 102.6% in the first quarter, now owning 873 shares worth $60,000. The ETF is managed by First Trust Advisors.

Comparison with Other ETFs

While the First Trust Small Cap Growth AlphaDEX ETF (FYC) offers exposure to the small-cap growth segment, investors should consider other ETFs in the space, such as the iShares Russell 2000 Growth ETF (IWO) and the Vanguard Small-Cap Growth ETF (VBK), which have lower expense ratios and potentially lower risk.

Conclusion

The First Trust Small Cap Growth AlphaDEX ETF (FYC) provides investors with exposure to the small-cap growth segment through a smart beta strategy. With a high level of risk and a focus on the Financials sector, the ETF is suitable for investors seeking higher potential returns but should be considered carefully due to its volatility. Investors should also weigh its performance and risk against other ETFs in the small-cap growth space.

References
[1] https://www.marketbeat.com/instant-alerts/first-trust-small-cap-growth-alphadex-fund-nasdaqfyc-stock-price-up-03-heres-why-2025-07-25/
[2] https://finance.yahoo.com/news/first-trust-small-cap-growth-102002496.html
[3] https://www.ainvest.com/news/trust-small-cap-core-alphadex-etf-comprehensive-guide-2507/