Is First Trust Mid Cap Growth AlphaDEX ETF (FNY) a Strong ETF Right Now?

The First Trust Mid Cap Growth AlphaDEX ETF (FNY), a smart beta fund with $437.42 million in assets under management, tracks the Nasdaq AlphaDEX Mid Cap Growth Index, employing a stock selection methodology to target outperformance in the mid-cap growth segment. While exhibiting a high annual expense ratio of 0.70%, FNY has posted solid returns, including 12.56% year-to-date and 19.09% over the last 12 months (as of September 15, 2025), with significant allocations to Industrials, Information Technology, and Consumer Discretionary. This higher-cost, active-like approach contrasts with significantly larger and cheaper market-cap weighted alternatives like Vanguard Mid-Cap Growth ETF (VOT) and iShares Russell Mid-Cap Growth ETF (IWP), which have expense ratios of 0.07% and 0.23% respectively.

Analysis

The First Trust Mid Cap Growth AlphaDEX ETF (FNY) is a smart-beta fund employing a proprietary stock-selection methodology to target outperformance within the mid-cap growth market segment. The fund has demonstrated strong recent performance, delivering a year-to-date return of approximately 12.56% and a 12-month return of 19.09% as of September 15, 2025. However, this strategy is associated with a high annual operating expense ratio of 0.70%, positioning FNY as one of the most expensive products in its category. Its portfolio is well-diversified across 226 holdings, with the top 10 constituents accounting for only 9.54% of assets, and shows a significant sector concentration in Industrials at 26.6%. The fund exhibits a medium-risk profile with higher volatility than the market, indicated by a beta of 1.16. In the competitive landscape, FNY's $437.42 million in assets is substantially smaller than passive alternatives like the Vanguard Mid-Cap Growth ETF (VOT) and the iShares Russell Mid-Cap Growth ETF (IWP), which offer exposure at significantly lower expense ratios of 0.07% and 0.23%, respectively, presenting a clear trade-off between FNY's active methodology and the cost-efficiency of passive index tracking.

Key Decisions for Investors

• Investors must weigh FNY's strong 19.09% trailing 12-month performance against its high 0.70% expense ratio, which creates a significant hurdle for justifying its active strategy over time.
• For those prioritizing lower costs and passive exposure to mid-cap growth, it is prudent to evaluate the substantially larger and cheaper market-cap weighted alternatives mentioned, such as VOT and IWP.
• An allocation to FNY represents a tactical bet on the AlphaDEX methodology's ability to generate alpha and requires an acceptance of higher volatility, as indicated by its 1.16 beta, and a strategic overweight to the Industrials sector.