FMK vs ITEQ Fund Comparison

A comparison between FMK and ITEQ based on their expense ratio, growth, holdings and how well they match their benchmark performance.

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Minafi's Take on FMK vs ITEQ

Here's an in depth look at the differences between First Trust Mega Cap AlphaDEX Fund($FMK) and BlueStar Israel Technology ETF($ITEQ).

To start off, here's a look at the basics of each fund. Keep an eye on the FI Score. That's a custom score from 0 to 100 that we generate based on how good this fund is for the casual investor. Most investors only need a handful of total funds in their portfolio. The higher the score, the more likely this is one of those few. Score alone isn't enough! Keep reading on to see how different (or perhaps similar) these two funds are.

  • fmk
  • ETF
  • US Stocks
  • Large Blend

First Trust Mega Cap AlphaDEX Fund

Expenses: 0.70% (Better than 1% of similar funds)

This is a bad choice for a Large Blend US Stocks fund. See why »

  • iteq
  • ETF
  • Sector Equity
  • Technology

BlueStar Israel Technology ETF

Expenses: 0.75% (Better than 1% of similar funds)

This is a bad choice for a Technology Sector Equity fund. See why »

Both $FMK and $ITEQ are categorized as ETFs. ETFs have an added bonus over mutual funds of being more widely available. Mutual funds are often limited to only the issuing investment brokerage. Since these are both ETFs, you may be able to find these at a wider number of investment apps and websites.

The biggest disadvantage of ETFs is that some platforms only allow you to purchase ETFs in whole shares. So if an ETF is going for $75, you may need to invest in increments of $75. Most 401(k)'s allow for investing down to the penny, but you'll want to verify your platform allows for "fractional ETF Shares".

To learn more about the difference between these two, you can read about the difference between ETFs and Mutual Funds.

When evaluating a fund, the first things I look at are:

  • What it invests in
  • How much it charges in fees
  • How large the fund is

Let's look into these criteria one by one and see if either of these funds stands out.

Fund Holdings Comparison

Minafi's FI Score algorithm takes into account the category and market. The more niche a fund is, the lower the score. This doesn't mean it's a worse fund, but it does mean you should stop and make sure this a fund you need to diversify your portfolio.

FMKITEQ
Market Score 0.7 /10 3.6 /10
Category Score 10.0 /10 0.0 /10
Total10.73.6

A score of 10 means this is a solid market and category that almost every investor will want to have investments in. The lower the score, the more specific the investment. These scores are based on when most investors would add these funds to their portfolio. A score of 10 means that this fund (or one like it) belongs in a three-fund portfolio. The lower the score, the farther down in your portfolio a fund would go.

For each fund we've created a "diversification score" – a metric to indicate how closely each funds asset allocation matches it's benchmark. For example, an S&P 500 fund would have a diversification score of 10 if it's fully in line with the actual S&P 500.

The diversification score for FMK is 2.7/10, while ITEQ has a diversification score of 1.6/10.

In other words, FMK more closely matches it's benchmark.

Winner: $FMK

Fee Comparison

Fees are one of the biggest killers of portfolio growth. The difference between a 2% fee and a 0.04% fee over 30 years can result in your portfolio having half the total value!

If you're just getting started investing and learning how fees impact your portfolio, I'd encourage you to read through my free investment course (specifically '2.2 - All About Fees') where I go over all the different types of fees you can be charged and how to lower them.

For these two funds, FMK has an expense ratio of 0.70% while ITEQ has an expense ratio of 0.75%. In this case, both of these funds have a similar fee.

Winner: $FMK (barely)

Fund Size Comparison

Both FMK and ITEQ have a similar number of assets under management. FMK has 20.8 Million in assets under management, while ITEQ has 106 Million.

Minafi categorizes both of these funds as small funds. Fund size is a good indication of how many other investors trust this fund. A large fund by itself doesn't mean it's a good fund, but it is one thing to consider when figuring out how to choose the right fund.

Winner: tie

Which Should You Choose? FMK or ITEQ?

Comparing these two funds isn't an apples to apples comparison. FMK is a US StocksLarge Blend fund, while ITEQ is a Sector EquityTechnology fund.

If you're aiming to build a diversified, low-fee, tax-optimized portfolio you likely won't be choosing between these two funds since they're different enough.

Running both of these funds through Minafi's FI Score algorithm, gives FMK a score of 35 and ITEQ a score of 29.

Winner: Neither, I'd research more funds if you're looking to invest for retirement.

$FMK

First Trust Mega Cap AlphaDEX Fund

35

Read More
Ratings
Rating TypeRating
Diversification Score3/10
Expense Ratio Score6/10
Expense Rating3/10
Market Score1/10
Category Score10/10
Overview
OverviewDetails
Fund TypeETF
Inception DateMay-11-2011
ExchangeNASDAQ
Expense Ratio0.700%
Net Assets20.8 Million
Yield1.68%
Holdings
DescriptionInfo
MarketUS Stocks
CategoryLarge Blend
Sectors
  • Basic Materials 0.00%
  • Communication Services 19.29%
  • Consumer Cyclicals 8.54%
  • Consumer Defensive 5.58%
  • Energy 6.47%
  • Financial Services 14.63%
  • Healthcare 20.34%
  • Industrials 3.57%
  • Real Estate 3.21%
  • Technology 14.68%
  • Utilities 3.69%
Regions
  • North America 100.00%

$ITEQ

BlueStar Israel Technology ETF

29

Read More
Ratings
Rating TypeRating
Diversification Score2/10
Expense Ratio Score5/10
Expense Rating3/10
Market Score4/10
Category Score0/10
Overview
OverviewDetails
Fund TypeETF
Inception DateNov-2-2015
ExchangeNYSE ARCA
Expense Ratio0.750%
Net Assets106 Million
Yield0.02%
Holdings
DescriptionInfo
MarketSector Equity
CategoryTechnology
Sectors
  • Basic Materials 0.00%
  • Communication Services 1.67%
  • Consumer Cyclicals 0.83%
  • Consumer Defensive 0.00%
  • Energy 0.00%
  • Financial Services 1.85%
  • Healthcare 12.16%
  • Industrials 6.57%
  • Real Estate 0.00%
  • Technology 71.15%
  • Utilities 5.77%
Regions
  • Africa/Middle East 52.29%
  • Asia Developed 1.51%
  • Asia Emerging 0.34%
  • Europe Developed 0.12%
  • North America 44.90%
  • United Kingdom 0.83%

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