New York, USA – The First Trust Mid Cap Value AlphaDEX ETF, known as FNK, presents itself as a dynamic mid-cap fund with a focus on value. However, despite having the lowest forward P/E ratio in its category, it has struggled to outperform benchmarks like the iShares S&P Mid-Cap 400 Value ETF. This disparity in performance has led some experts to assign FNK a “sell” rating due to concerns about its ability to deliver consistent returns.

FNK tracks the Nasdaq AlphaDEX Mid Cap Value Index by selecting 225 stocks based on specific growth and value factors. The selection process divides the chosen stocks into quintiles based on their scores and assigns weights accordingly. With a quarterly reconstitution and rebalance, FNK experiences a high portfolio turnover, which can impact its performance and stability over time.

Since tracking its current Index in 2016, FNK has consistently lagged behind other similar funds like the WisdomTree U.S. MidCap Earnings Fund ETF and the Invesco S&P MidCap 400 Pure Value ETF in terms of returns. This underperformance has raised concerns about FNK’s ability to deliver value to investors, especially when compared to lower-cost alternatives in the market.

With a focus on sector allocations and sub-industry fundamentals, FNK differentiates itself from its competitors in terms of exposure to specific sectors like Energy. However, this exposure comes with inherent risks, particularly in a changing market environment where interest rates may fluctuate.

While FNK may offer some advantages in terms of value and size, its overall ranking falls short when compared to broader-based funds like IJJ. Despite its strengths in certain areas, FNK’s performance history may deter potential investors looking for a more stable and balanced portfolio.

In conclusion, FNK’s unique approach to mid-cap value investing may appeal to some investors seeking exposure to the value factor. However, its track record of underperformance compared to lower-cost alternatives raises concerns about its long-term viability. As experts continue to evaluate the fund’s performance and potential, the “sell” rating on FNK remains in place as a precautionary measure for investors looking to maximize returns in their portfolios.