Going by the new 52-week highs and 52-week lows from Tuesday’s trading, the bulls are back in control.
Yesterday, the bulls flipped the switch. For the first time in a long time, new 52-week highs on both the NYSE and Nasdaq easily surpassed new 52-week lows.
I don’t know how long this will last, but it suggests that the markets have calmed down – the VIX approaching 18 provides some confirmation. But, as we learned in 2026, things can change in the blink of an eye, so govern yourself accordingly.
Let’s go back to the new 52-week highs and lows. On the New York Stock Exchange, the highs were 126, 14 times the lows, while on the Nasdaq, the highs exceeded the lows by 289 to 65.
Based on the bullish data, today’s article will be about a momentum play worth taking advantage of for the rest of 2026 and into 2027.
Small caps have been on my radar since late 2023. While I was clearly too early to the party, the past year has proven that they are a force to be reckoned with and something worth including in your investment portfolio.
Yesterday, three First Trust small cap ETFs hit new 52-week highs. I’ll decide which of the three is the best buy for long-term investors looking for exposure to small caps.
The first Trust Small Cap Core AlphaDEX (FYX) fund Tracks the Nasdaq AlphaDEX Small Cap Core Index, a collection of small-cap stocks selected from the Nasdaq US 700 Small Cap Index, using the AlphaDEX stock selection methodology.
The process combines growth factors, including price appreciation and sales growth, with value factors such as book-to-price ratio, cash flow to price, and return on assets. Each of the 700 stocks is assigned a growth score and a value score based on the above and other factors.
They divide the 525 highest-scoring stocks into five equal groups based on their ranking. Higher-ranked groups receive a higher weight in the index and all stocks within each group have the same weight. The index is updated and rebalanced every quarter.
First Trust launched the ETF in May 2007; It has $1.15 billion in net assets spread across 525 companies. It is the largest of the three First Trust small-cap ETFs discussed.
The top 10 holdings account for only 4.07%. With this type of diversification, you won’t hit a home run owning FYX, but you’re less likely to lose your shirt if current demand for small-cap stocks fades.
The top three sectors by weight are financial (20.38%), industrial (17.47%) and healthcare (14.20%). Technology represents only 8.34% of the portfolio.
Based on risk-adjusted returns, morning star gives it four stars over the last 10 years, with a 10-year annualized total return of 12.14%.
Yesterday it hit a new 52-week high of $128.47, number 53 in the last 12 months. Its shares are up 53% over the past year.
First Trust AlphaDEX Small Cap Growth Fund (FYC) Tracks the Nasdaq AlphaDEX Small Cap Growth Index, a collection of small-cap stocks also selected from the Nasdaq US 700 Small Cap Growth Index, using the AlphaDEX stock selection methodology.
First Trust launched the ETF in April 2011 and has $984 million in net assets, spread across 264 companies. It is the second largest of the three First Trust small-cap ETFs discussed. The top 10 holdings account for 8.1%, double the weight of FYX.
The top three sectors by weight are healthcare (26.46%), industrial (21.95%), and technology (11.28%). In FYC, financials have a weighting of 10.91%, approximately half of FYX.
Based on risk-adjusted returns, morning star It gives it four stars in the last 10 years and five stars in the last five years. Their 10- and 5-year annualized total returns are 13.74% and 9.05%, respectively.
Yesterday it hit a new 52-week high of $106.37, number 66 in the last 12 months. Its shares are up 62% over the past year. Notably, it also reached an all-time high yesterday.
First Trust AlphaDEX Small Cap Value Fund (FYT) Tracks the Nasdaq AlphaDEX Small Cap Value Index, a collection of small-cap stocks also selected from the Nasdaq US 700 Small Cap Value Index, using the AlphaDEX stock selection methodology.
First Trust launched FYT at the same time as FYC in April 2011 and has $162 million in net assets, spread across 262 companies. It is the smallest of the three First Trust small-cap ETFs analyzed. This makes sense, given that value stocks have been out of fashion until the last six months to a year.
The top 10 holdings count is 6.78%, a little more than halfway between FYX and FYC.
The three main sectors by weight are financial (26.85%), consumer discretionary (15.34%) and industrial (13.29%). In FYT, the weight of healthcare is only 5.92%, much lower than that of FYX and FYC.
morning star does not qualify it. This is probably due to the small asset base. Their 10- and 5-year annualized total returns are 10.25% and 6.48%, respectively.
Yesterday it hit a new 52-week high of $65.08, its 45th in the last 12 months. Its shares are up 45% over the past year. FYT also hit an all-time high yesterday.
Whenever investors consider purchasing ETFs, fees are an important consideration. FYX’s total expense ratio is 0.58%, while FYC and FYT are 12 basis points higher. That difference partly explains why FYX has attracted the most assets of the three.
Interestingly, the 10-year annualized total returns of the three ETFs line up perfectly, with FYX’s at 12.14%, 189 basis points above FYT’s and 160 basis points below FYC’s. That’s what you want and expect to happen with core, growth, and value funds.
So if cost is your most important criterion for choosing an ETF, then you’ll want to go with FYX. However, if cost is not a deciding factor, then you have to decide between value and growth. This April 1 article from Royce Investment Partners does a good job on the topic.
“For the third consecutive quarter, the Russell 2000 Value Index outperformed the Russell 2000 Growth Index, with a gain of 5.0% versus a loss of -2.8% in 1Q26,” writes Royce Co-Chief Investment Officer Francis Gannon.
“Unlike small-cap value’s gains in the final two quarters of 2025, first-quarter results were more in line with the long-term historical patterns of each style index: small-cap growth typically outperforms in fast-growing or profit-hungry market climates, while small-cap value typically outperforms in down markets or when the economy is expanding.”
I think it’s fair to say that we are not in fast-growing or profit-hungry markets, but rather we are most likely heading into a bear market in the second half of 2026 (although the S&P 500 is now in positive territory for the year), so FYT appears to be a bit more attractive at this point in the economic cycle.
However, in the long term, I don’t think you can go wrong by owning FTX, FYC, and FYT.
On the date of publication, Will Ashworth had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
