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Is First Trust IndustrialsProducer Durables AlphaDEX ETF (FXR) a Strong ETF Right Now?
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Launched on 05/08/2007, the First Trust IndustrialsProducer Durables AlphaDEX ETF (FXR - Free Report) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FXR has been able to amass assets over $1.68 billion, making it one of the larger ETFs in the Industrials ETFs. FXR, before fees and expenses, seeks to match the performance of the StrataQuant Industrials Index.
The StrataQuant Industrials 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.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for FXR are 0.61%, which makes it on par with most peer products in the space.
FXR's 12-month trailing dividend yield is 0.60%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
FXR's heaviest allocation is in the Industrials sector, which is about 67.20% of the portfolio. Its Materials and Information Technology round out the top three.
Taking into account individual holdings, Robert Half International Inc. (RHI - Free Report) accounts for about 1.51% of the fund's total assets, followed by Capital One Financial Corporation (COF - Free Report) and Westrock Company (WRK - Free Report) .
The top 10 holdings account for about 14.19% of total assets under management.
Performance and Risk
The ETF has lost about -11.46% so far this year and is down about -2.10% in the last one year (as of 03/15/2022). In the past 52-week period, it has traded between $53.82 and $63.
FXR has a beta of 1.30 and standard deviation of 27.37% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 134 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust IndustrialsProducer Durables AlphaDEX ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI - Free Report) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $4.54 billion in assets, Industrial Select Sector SPDR ETF has $15.72 billion. VIS has an expense ratio of 0.10% and XLI charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.
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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Is First Trust IndustrialsProducer Durables AlphaDEX ETF (FXR) a Strong ETF Right Now?
Launched on 05/08/2007, the First Trust IndustrialsProducer Durables AlphaDEX ETF (FXR - Free Report) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FXR has been able to amass assets over $1.68 billion, making it one of the larger ETFs in the Industrials ETFs. FXR, before fees and expenses, seeks to match the performance of the StrataQuant Industrials Index.
The StrataQuant Industrials 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.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for FXR are 0.61%, which makes it on par with most peer products in the space.
FXR's 12-month trailing dividend yield is 0.60%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
FXR's heaviest allocation is in the Industrials sector, which is about 67.20% of the portfolio. Its Materials and Information Technology round out the top three.
Taking into account individual holdings, Robert Half International Inc. (RHI - Free Report) accounts for about 1.51% of the fund's total assets, followed by Capital One Financial Corporation (COF - Free Report) and Westrock Company (WRK - Free Report) .
The top 10 holdings account for about 14.19% of total assets under management.
Performance and Risk
The ETF has lost about -11.46% so far this year and is down about -2.10% in the last one year (as of 03/15/2022). In the past 52-week period, it has traded between $53.82 and $63.
FXR has a beta of 1.30 and standard deviation of 27.37% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 134 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust IndustrialsProducer Durables AlphaDEX ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI - Free Report) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $4.54 billion in assets, Industrial Select Sector SPDR ETF has $15.72 billion. VIS has an expense ratio of 0.10% and XLI charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.
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.