The First Trust Small Cap Value AlphaDEX ETF (FYT) made its debut on 04/19/2011, and is a smart beta exchange traded fund that provides 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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Because the fund has amassed over $265.67 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.71%, making it one of the most expensive products in the space.

FYT's 12-month trailing dividend yield is 1.17%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Financials sector - about 30.60% of the portfolio. Industrials and Consumer Discretionary round out the top three.

When you look at individual holdings, Cornerstone Building Brands Inc. (CNR) accounts for about 0.84% of the fund's total assets, followed by Mr. Cooper Group Inc. (COOP) and Tegna Inc. (TGNA).