FYC vs IMCG

FYCCFirst Trust Small Cap Growth AlphaDEX Fund

IMCGAiShares Morningstar Mid-Cap Growth ETF

In short

FYC Small-cap growth, but not by market cap. The AlphaDEX screen ranks the Nasdaq US 700 Small Cap universe on growth and value factors, keeps the best scorers, tiers their weights by rank, and reshuffles quarterly. Rules-based stock picking, not index hugging.

IMCG Growth investing usually means megacaps. IMCG works the middle of the market instead: roughly 300 mid-cap growth names, indexed since 2004, for six basis points a year.

Stated mandate

FYC The fund seeks to track, before fees and expenses, the price and yield performance of the Nasdaq AlphaDEX Small Cap Growth Index through an indexing approach.

IMCG The Fund seeks to track an index of U.S. mid-capitalization equities with growth characteristics. Its strategy uses representative sampling and generally invests at least 80% of assets in securities from the Underlying Index.

Why people hold it

• FYC Weight follows score, not size: selected names are split into quintiles, higher-scoring quintiles get the bigger share of the index, and stocks sit equal-weighted inside each quintile.sec.gov
• The screen blends both sides of the style aisle, ranking on growth factors (3-, 6- and 12-month price moves, sales-to-price, sales growth) and value factors (book-to-price, cash-flow-to-price, return on assets).sec.gov
• The index is reconstituted and rebalanced quarterly, so the roughly 300 small caps it holds get re-scored four times a year instead of riding a static list.sec.gov
• Live since 2011 and now a multi-billion-dollar fund, meaning this methodology has been run through more than one small-cap boom and bust rather than back-tested through them.

• IMCG 0.06% a year, one third of the 0.18% median for its growth-fund peer group. Mid-cap indexing at large-cap-index prices.
• The growth leaderboard is stacked with large-cap funds (VUG, SCHG, SPYG, VONG). IMCG covers the middle instead, holding about 300 mid-cap growth names.
• Sticks close to the Morningstar mid-cap growth index it follows, one of the tighter tracking jobs in its peer group.
• Running since 2004 under the iShares roof, with a multi-billion-dollar asset base behind it.

Worth knowing

• FYC Cost is the headline trade-off: 0.70% a year, well above the typical fund in its growth peer group, where cap-weighted options like SPYG, SCHG and VUG run at or below 0.04%.
• The prospectus flags that the quarterly reconstitution schedule may produce a higher rate of portfolio turnover, with the trading costs and in-fund capital gains that can come with it.sec.gov
• Because weights ignore market cap, the fund can concentrate in an industry group when its index does, and it trades only moderately, so spreads deserve a look before you place an order.sec.gov

• IMCG Moderately traded rather than heavily traded, so bid-ask spreads can run wider than the megacap growth ETFs sitting beside it in the category.
• This is a size-and-style bet. Mid-cap growth companies tend to move more sharply than the broad market, in both directions.
• Distributions land quarterly, but a growth screen is not built around income.

Full FYC profile⁠

Full IMCG profile⁠