A smart beta exchange traded fund, the First Trust Small Cap Value AlphaDEX ETF (FYT) debuted on 04/19/2011, and offers broad exposure to the Style Box - Small Cap Value category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

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.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

Because the fund has amassed over $201.18 million, this makes it one of the average sized ETFs in the Style Box - Small Cap Value. FYT is managed by First Trust Advisors. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Small Cap Value Index.

The NASDAQ AlphaDEX Small Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Value Index.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.70% for this ETF, which makes it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 1.41%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

For FYT, it has heaviest allocation in the Financials sector --about 26.1% of the portfolio --while Consumer Discretionary and Industrials round out the top three.

When you look at individual holdings, Par Pacific Holdings, Inc. (PARR) accounts for about 0.79% of the fund's total assets, followed by Dorian Lpg Ltd. (LPG) and Pbf Energy Inc. (PBF).

Its top 10 holdings account for approximately 7.21% of FYT's total assets under management.

Performance and Risk

The ETF has gained about 29.59% and is up about 42.92% so far this year and in the past one year (as of 08/10/2026), respectively. FYT has traded between $51.90 and $73.66 during this last 52-week period.

The fund has a beta of 0.97 and standard deviation of 20.99% for the trailing three-year period, which makes FYT a high risk choice in this particular space. With about 263 holdings, it effectively diversifies company-specific risk .

Alternatives

First Trust Small Cap Value AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

iShares Russell 2000 Value ETF (IWN) tracks Russell 2000 Value Index and the Vanguard Morningstar Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. iShares Russell 2000 Value ETF has $14.63 billion in assets, Vanguard Morningstar Small-Cap Value ETF has $38.09 billion. IWN has an expense ratio of 0.24% and VBR 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 - Small Cap Value

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit

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First Trust Small Cap Value AlphaDEX ETF (FYT): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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