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Is First Trust IndustrialsProducer Durables AlphaDEX ETF (FXR) a Strong ETF Right Now?
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The First Trust IndustrialsProducer Durables AlphaDEX ETF (FXR - Free Report) was launched on 05/08/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Industrials ETFs 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.42 billion, making it one of the larger ETFs in the Industrials ETFs. This particular fund seeks to match the performance of the StrataQuant Industrials Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.61%.
The fund has a 12-month trailing dividend yield of 0.82%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 66.60% of the portfolio. Its Materials and Information Technology round out the top three.
Looking at individual holdings, Wesco International, Inc. (WCC - Free Report) accounts for about 1.48% of total assets, followed by Brunswick Corporation (BC - Free Report) and Carlisle Companies Incorporated (CSL - Free Report) .
FXR's top 10 holdings account for about 14.01% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust IndustrialsProducer Durables AlphaDEX ETF has lost about -23.22% so far, and is down about -18.13% over the last 12 months (as of 09/23/2022). FXR has traded between $47.30 and $63 in this past 52-week period.
The ETF has a beta of 1.25 and standard deviation of 28.53% for the trailing three-year period, making it a medium risk choice in the space. With about 131 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 $3.24 billion in assets, Industrial Select Sector SPDR ETF has $11.95 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?
The First Trust IndustrialsProducer Durables AlphaDEX ETF (FXR - Free Report) was launched on 05/08/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Industrials ETFs 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.42 billion, making it one of the larger ETFs in the Industrials ETFs. This particular fund seeks to match the performance of the StrataQuant Industrials Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.61%.
The fund has a 12-month trailing dividend yield of 0.82%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 66.60% of the portfolio. Its Materials and Information Technology round out the top three.
Looking at individual holdings, Wesco International, Inc. (WCC - Free Report) accounts for about 1.48% of total assets, followed by Brunswick Corporation (BC - Free Report) and Carlisle Companies Incorporated (CSL - Free Report) .
FXR's top 10 holdings account for about 14.01% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust IndustrialsProducer Durables AlphaDEX ETF has lost about -23.22% so far, and is down about -18.13% over the last 12 months (as of 09/23/2022). FXR has traded between $47.30 and $63 in this past 52-week period.
The ETF has a beta of 1.25 and standard deviation of 28.53% for the trailing three-year period, making it a medium risk choice in the space. With about 131 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 $3.24 billion in assets, Industrial Select Sector SPDR ETF has $11.95 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.