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Should You Invest in the First Trust Materials AlphaDEX ETF (FXZ)?
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Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the First Trust Materials AlphaDEX ETF (FXZ - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $226.42 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. FXZ seeks to match the performance of the StrataQuant Materials Index before fees and expenses.
The StrataQuant Materials Index is a modified equal-dollar weighted index designed by the AMEX to objectively identify and select stocks from the Russell 1000 Index that may generate positive alpha relative to traditional passive style indices through the use of the AlphaDEX screening methodology.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.65%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.39%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Materials sector--about 84.90% of the portfolio, followed by Industrials.
Looking at individual holdings, The Scotts Miracle-Gro Company (SMG - Free Report) accounts for about 4.96% of total assets, followed by The Timken Company (TKR - Free Report) and Reliance Steel & Aluminum Co. (RS - Free Report) .
The top 10 holdings account for about 45.17% of total assets under management.
Performance and Risk
So far this year, FXZ has added about 9.33%, and it's up approximately 37.40% in the last one year (as of 02/22/2021). During this past 52-week period, the fund has traded between $22.82 and $52.88.
The ETF has a beta of 1.29 and standard deviation of 30.42% for the trailing three-year period, making it a medium risk choice in the space. With about 38 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Materials AlphaDEX ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FXZ is a good option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index and the Materials Select Sector SPDR ETF (XLB - Free Report) tracks Materials Select Sector Index. FlexShares Morningstar Global Upstream Natural Resources ETF has $3.93 billion in assets, Materials Select Sector SPDR ETF has $6.26 billion. GUNR has an expense ratio of 0.46% and XLB charges 0.13%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should You Invest in the First Trust Materials AlphaDEX ETF (FXZ)?
Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the First Trust Materials AlphaDEX ETF (FXZ - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $226.42 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. FXZ seeks to match the performance of the StrataQuant Materials Index before fees and expenses.
The StrataQuant Materials Index is a modified equal-dollar weighted index designed by the AMEX to objectively identify and select stocks from the Russell 1000 Index that may generate positive alpha relative to traditional passive style indices through the use of the AlphaDEX screening methodology.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.65%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.39%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Materials sector--about 84.90% of the portfolio, followed by Industrials.
Looking at individual holdings, The Scotts Miracle-Gro Company (SMG - Free Report) accounts for about 4.96% of total assets, followed by The Timken Company (TKR - Free Report) and Reliance Steel & Aluminum Co. (RS - Free Report) .
The top 10 holdings account for about 45.17% of total assets under management.
Performance and Risk
So far this year, FXZ has added about 9.33%, and it's up approximately 37.40% in the last one year (as of 02/22/2021). During this past 52-week period, the fund has traded between $22.82 and $52.88.
The ETF has a beta of 1.29 and standard deviation of 30.42% for the trailing three-year period, making it a medium risk choice in the space. With about 38 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Materials AlphaDEX ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FXZ is a good option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index and the Materials Select Sector SPDR ETF (XLB - Free Report) tracks Materials Select Sector Index. FlexShares Morningstar Global Upstream Natural Resources ETF has $3.93 billion in assets, Materials Select Sector SPDR ETF has $6.26 billion. GUNR has an expense ratio of 0.46% and XLB charges 0.13%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.