TMFX vs. FAAR

Last updated Jun 23, 2026

TMFX (Motley Fool Next Index ETF) and FAAR (First Trust Alternative Absolute Return Strategy ETF) are both exchange-traded funds - TMFX is a Mid Cap Growth Equities fund tracking the Motley Fool Next Index, while FAAR is a Commodities fund actively managed by First Trust. TMFX is passively managed, while FAAR is actively managed. Over the past 3 years, TMFX returned 12.55%/yr vs 10.91%/yr for FAAR. At a correlation of -0.04, they often move in opposite directions. TMFX charges 0.50%/yr vs 0.95%/yr for FAAR.

Performance

TMFX vs. FAAR - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Motley Fool Next Index ETF (TMFX) and First Trust Alternative Absolute Return Strategy ETF (FAAR). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, TMFX achieves a 2.16% return, which is significantly lower than FAAR's 20.23% return.

TMFX

• 1D: -0.61%
• 1M: 0.77%
• YTD: 2.16%
• 6M: -0.33%
• 1Y: 11.91%
• 3Y*: 12.55%
• 5Y*: —
• 10Y*: —

FAAR

• 1D: -0.05%
• 1M: -4.34%
• YTD: 20.23%
• 6M: 19.92%
• 1Y: 26.86%
• 3Y*: 10.91%
• 5Y*: 7.89%
• 10Y*: 4.79%

*Multi-year figures are annualized to reflect compound growth (CAGR)

TMFX vs. FAAR - Yearly Performance Comparison

	2026 (YTD)	2025	2024	2023	2022	2021
TMFX Motley Fool Next Index ETF	2.16%	10.41%	16.04%	17.95%	-28.16%	-0.65%
FAAR First Trust Alternative Absolute Return Strategy ETF	20.23%	8.07%	5.97%	-5.63%	10.15%	-0.83%

Correlation

The correlation between TMFX and FAAR is -0.09, meaning there is essentially no relationship between their price movements. Each responds to its own set of market drivers, making them strong candidates for combining in a diversified portfolio.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	-0.09
Correlation (3Y) Calculated over the trailing 3-year period	0.00
Correlation (All Time) Calculated using the full available price history since Dec 31, 2021	-0.04

Return for Risk

TMFX vs. FAAR — Risk / Return Rank

Compare risk-adjusted metric ranks to identify better-performing investments over the past 12 months.

TMFX

TMFX Risk / Return Rank: 20
TMFX Sharpe Ratio Rank: 20
TMFX Sortino Ratio Rank: 20
TMFX Omega Ratio Rank: 18
TMFX Calmar Ratio Rank: 20
TMFX Martin Ratio Rank: 22

FAAR

FAAR Risk / Return Rank: 70
FAAR Sharpe Ratio Rank: 64
FAAR Sortino Ratio Rank: 65
FAAR Omega Ratio Rank: 58
FAAR Calmar Ratio Rank: 87
FAAR Martin Ratio Rank: 78

The rank (0–100) shows how this investment's returns compare to the risk taken. Higher = better. Based on the past 12 months of data, combining Sharpe, Sortino, and other metrics used by quantitative funds and institutional investors.

TMFX vs. FAAR - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Motley Fool Next Index ETF (TMFX) and First Trust Alternative Absolute Return Strategy ETF (FAAR). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.

Values are calculated on a 1-year rolling basis and updated daily. Risk-adjusted metrics are more stable over longer periods — use the period switch above to explore them.

	TMFX	FAAR	Difference
Sharpe ratio: Return per unit of total volatility	0.70	2.02	-1.32
Sortino ratio: Return per unit of downside risk	1.09	2.89	-1.80
Omega ratio: Gain probability vs. loss probability	1.12	1.35	-0.22
Calmar ratio: Return relative to maximum drawdown	0.86	4.75	-3.89
Martin ratio: Return relative to average drawdown	2.72	14.70	-11.98

TMFX vs. FAAR - Sharpe Ratio Comparison

The current TMFX Sharpe Ratio is 0.70, which is lower than the FAAR Sharpe Ratio of 2.02. The chart below compares the historical Sharpe Ratios of TMFX and FAAR, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Drawdowns

TMFX vs. FAAR - Drawdown Comparison

The maximum TMFX drawdown since its inception was -34.72%, which is greater than FAAR's maximum drawdown of -18.03%. Use the drawdown chart below to compare losses from any high point for TMFX and FAAR.

Drawdown Indicators

	TMFX	FAAR	Difference
Max Drawdown Largest peak-to-trough decline	-34.72%	-18.03%	-16.69%
Max Drawdown (1Y) Largest decline over 1 year	-13.95%	-5.68%	-8.27%
Max Drawdown (3Y) Largest decline over 3 years	-24.05%	-11.54%	-12.51%
Max Drawdown (5Y) Largest decline over 5 years	—	-18.03%	—
Max Drawdown (10Y) Largest decline over 10 years	—	-18.03%	—
Current Drawdown Current decline from peak	-3.61%	-5.43%	+1.82%
Average Drawdown Average peak-to-trough decline	-14.58%	-7.82%	-6.76%
Ulcer Index Depth and duration of drawdowns from previous peaks	4.39%	1.89%	+2.50%

Volatility

TMFX vs. FAAR - Volatility Comparison

Motley Fool Next Index ETF (TMFX) has a higher volatility of 5.37% compared to First Trust Alternative Absolute Return Strategy ETF (FAAR) at 2.47%. This indicates that TMFX's price experiences larger fluctuations and is considered to be riskier than FAAR based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	TMFX	FAAR	Difference
Volatility (1M) Calculated over the trailing 1-month period	5.37%	2.47%	+2.90%
Volatility (6M) Calculated over the trailing 6-month period	12.82%	9.68%	+3.14%
Volatility (1Y) Calculated over the trailing 1-year period	17.16%	13.37%	+3.79%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	23.34%	12.95%	+10.39%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	23.34%	11.53%	+11.81%

TMFX vs. FAAR - Expense Ratio Comparison

TMFX has a 0.50% expense ratio, which is lower than FAAR's 0.95% expense ratio.

Dividends

TMFX vs. FAAR - Dividend Comparison

TMFX's dividend yield for the trailing twelve months is around 0.05%, less than FAAR's 9.57% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017
FAAR First Trust Alternative Absolute Return Strategy ETF	9.57%	11.63%	3.45%	3.20%	5.82%	6.49%	3.05%	1.02%	0.58%	2.83%
TMFX Motley Fool Next Index ETF	0.05%	0.05%	0.06%	0.16%	0.22%	0.00%	0.00%	0.00%	0.00%	0.00%

Frequently Asked Questions

Can I hold both TMFX and FAAR in my portfolio?

TMFX and FAAR have a correlation of -0.09, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, TMFX or FAAR?

TMFX has higher volatility (5.37%) compared to FAAR (2.47%). In terms of maximum drawdown, TMFX dropped -34.72% vs FAAR's -18.03%.

Which ETF is better, TMFX or FAAR?

On 3-year performance, TMFX leads with 12.55% vs 10.91% for FAAR. On fees, TMFX is cheaper at 0.50% per year. On volatility, FAAR has been the lower-risk option at 2.47%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, TMFX or FAAR?

Over the 3-year period, TMFX has performed better with a 12.55% return vs 10.91%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, TMFX or FAAR?

TMFX is cheaper with a 0.50% expense ratio, compared with 0.95% for FAAR.

Which ETF pays a higher dividend yield, TMFX or FAAR?

FAAR has the higher dividend yield at 9.57%, compared with 0.05% for TMFX.

What is the main difference between TMFX and FAAR?

TMFX is categorized as Mid Cap Growth Equities, while FAAR is Commodities. They also come from different issuers: Motley Fool and First Trust. Their fees differ too: 0.50% for TMFX and 0.95% for FAAR.

Which has better risk-adjusted returns?

FAAR currently has the higher Sharpe Ratio (2.02 vs 0.70), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.