The First Trust Small Cap Core AlphaDEX ETF (FYX) launched on May 8, 2007, and focuses on the Small Cap Blend market. Unlike traditional ETFs that use market cap weighting, this smart beta ETF follows non-cap weighted strategies. Smart beta ETFs employ different techniques, from simple to complex, such as equal weighting or using volatility and momentum factors. FYX is managed by First Trust Advisors and has assets totaling over $971 million. It aims to mimic the performance of the Nasdaq AlphaDEX Small Cap Core Index by selecting stocks from the NASDAQ US 700 Small Cap Index. FYX has operating expenses of 0.58% and offers a 12-month trailing dividend yield of 0.61%. Its main sectors include Financials (18.5%), along with Industrials and Healthcare. The top holdings are Praxis Precision Medicines, Inc. (0.86%), Globalstar, Inc., and Arrowhead Pharmaceuticals, Inc. In terms of performance, FYX has increased by about 4.25% year-to-date and 16.7% over the past year. It traded within a range of $79.22 to $117.95 over the last 52 weeks, with a beta of 1.07 and a standard deviation of 21.06% over three years. The ETF holds 525 stocks, helping to reduce risks from specific companies. Other options in the Small Cap Blend category include the iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR), which have assets of $76.57 billion and $91.26 billion, respectively. As we enter 2026, it’s clear that small-cap stocks lagged behind large-caps in the last quarter of 2025. The December 2025 jobs report indicated strong economic performance, raising questions about when the Federal Reserve might adjust interest rates. This economic uncertainty creates challenges for funds like FYX, which focus on smaller, domestically-oriented companies. With a beta of 1.07 and a historical standard deviation of over 21%, we can expect FYX to experience larger fluctuations compared to the broader market in the upcoming weeks. Its significant holdings in financials, at 18.5%, make it especially sensitive to changes in interest rates, which caused notable volatility in that sector during 2025. Any surprises from the Fed could significantly impact the ETF’s performance. Recently, implied volatility in Russell 2000 options has risen above its three-month average, suggesting the market is preparing for bigger price changes. This scenario might make selling options premium through strategies like covered calls on existing FYX positions an appealing way to generate income. Traders who expect a significant move after the next Fed meeting but are uncertain about the direction may find buying straddles to capitalize on increased volatility an attractive strategy. We also need to stay aware that earnings season for the fourth quarter of 2025 is starting, which could bring important company-specific news. Although FYX has over 500 stocks, any negative earnings surprises in critical sectors like industrials or healthcare could put pressure on the fund. Keeping an eye on initial reports from these sectors will be essential for assessing short-term market sentiment and potential price movements.

here to set up a live account on VT Markets now