First Trust, the money management firm behind the popular Internet-related fund, “FDN,” filed paperwork with U.S. regulators to market two small-cap equities ETFs that use its AlphaDex indexing methodology—one focused on developed countries, the other on emerging markets.

The First Trust Developed Markets ex-U.S. Small Cap AlphaDex Fund and the First Trust Emerging Markets Small Cap AlphaDex Fund will each have annual expense ratios of 0.80 percent. Wheaton, Ill.-based First Trust didn’t disclose tickers in the filing.

First Trust’s new funds will go head-to-head with a growing roster of small-cap-focused funds already being marketed by big-name ETF firms such as San Francisco-based iShares, low-cost provider Charles Schwab, and State Street Global Advisors, the sponsor behind the SPDR funds.

Investors have increasingly embraced strategies that hone in on the small-cap equity segment for the higher-risk/higher-reward profile of those stocks. Small-cap equities are also generally thought to reflect domestic consumption, as opposed to larger companies, that are more directly linked to the global economy.

Small-cap ETFs focused on emerging markets are still relatively young, though they have begun to get traction, particularly since the global economic crisis began in earnest in 2008.

For example, SSgA’s SPDR Emerging Markets Small Cap ETF (NYSEArca: EWX) now has gathered about $736 million since its 2008 launch. The iShares newcomer to the space, the iShares Emerging Markets Small Cap ETF (NYSEArca: EEMS), has gathered $32 million since it came to market five months ago.

iShares also has a pair of funds that canvass the developed-world small-cap equity market. Those include the $1.2 billion iShares MSCI EAFE Small Cap ETF (NYSEArca: SCZ), which focuses on developed economies outside the United States. It also markets the much smaller iShares FTSE Developed Small Cap ex-North America ETF (NYSEArca: IFSM), which has gathered only $30 million since its 2007 launch.

Another competing fund in the space is the two-year-old Schwab International Small-Cap Equity (NYSEArca: SCHC), which has attracted nearly $138 million.

AlphaDex Methodology

But First Trust’s planned funds add a quasi-active wrinkle to the otherwise-purely beta competing funds.

First Trust’s AlphaDex quantitative indexing methodology seeks to generate extra return relative to traditional pure-beta market-capitalization-weighted indexes by employing an active security selection process. The company first rolled out its AlphaDex methodology in 2007.

First Trust already offers 30 AlphaDex ETFs tapping into everything from country-specific portfolios, to sector, to size and style methodologies, including a U.S.-focused AlphaDex small-cap ETF, “FYX,” which has gathered $125 million since it came to market in May 2007.

Apart from its AlphaDex funds, the company is also known for its niche ETF strategies, notably its $480 million First Trust Dow Jones Internet ETF (NYSEArca: FDN).