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Is First Trust Large Cap Core AlphaDEX ETF (FEX) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust Large Cap Core AlphaDEX ETF (FEX - Free Report) debuted on 05/08/2007, and offers broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.10 billion, making it one of the larger ETFs in the Style Box - Large Cap Blend. Before fees and expenses, FEX seeks to match the performance of the Nasdaq AlphaDEX Large Cap Core Index.
The NASDAQ AlphaDEX Large Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Index.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.59% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.05%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FEX, it has heaviest allocation in the Financials sector --about 17.10% of the portfolio --while Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Conocophillips (COP - Free Report) accounts for about 0.64% of the fund's total assets, followed by Chevron Corporation (CVX - Free Report) and Eog Resources, Inc. (EOG - Free Report) .
The top 10 holdings account for about 5.78% of total assets under management.
Performance and Risk
The ETF has lost about -9.28% and was up about 0.14% so far this year and in the past one year (as of 05/03/2022), respectively. FEX has traded between $81.50 and $92.98 during this last 52-week period.
The fund has a beta of 1.08 and standard deviation of 24.80% for the trailing three-year period, which makes FEX a medium risk choice in this particular space. With about 376 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Large Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $294.61 billion in assets, SPDR S&P 500 ETF has $371.74 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
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 Large Cap Core AlphaDEX ETF (FEX) a Strong ETF Right Now?
A smart beta exchange traded fund, the First Trust Large Cap Core AlphaDEX ETF (FEX - Free Report) debuted on 05/08/2007, and offers broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.10 billion, making it one of the larger ETFs in the Style Box - Large Cap Blend. Before fees and expenses, FEX seeks to match the performance of the Nasdaq AlphaDEX Large Cap Core Index.
The NASDAQ AlphaDEX Large Cap Core Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Index.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.59% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.05%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FEX, it has heaviest allocation in the Financials sector --about 17.10% of the portfolio --while Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Conocophillips (COP - Free Report) accounts for about 0.64% of the fund's total assets, followed by Chevron Corporation (CVX - Free Report) and Eog Resources, Inc. (EOG - Free Report) .
The top 10 holdings account for about 5.78% of total assets under management.
Performance and Risk
The ETF has lost about -9.28% and was up about 0.14% so far this year and in the past one year (as of 05/03/2022), respectively. FEX has traded between $81.50 and $92.98 during this last 52-week period.
The fund has a beta of 1.08 and standard deviation of 24.80% for the trailing three-year period, which makes FEX a medium risk choice in this particular space. With about 376 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Large Cap Core AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $294.61 billion in assets, SPDR S&P 500 ETF has $371.74 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
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.