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Should You Invest in the First Trust Materials AlphaDEX Fund (FXZ)?
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Launched on 05/08/2007, the First Trust Materials AlphaDEX Fund (FXZ - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Materials - Broad segment of the U.S. equity market.
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.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $322.35 M, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the U.S. 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 0.90%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Materials sector--about 81.10% of the portfolio. Industrials and Information Technology round out the top three.
Looking at individual holdings, Tahoe Resources Inc. accounts for about 3.58% of total assets, followed by Reliance Steel & Aluminum Co. (RS - Free Report) and Steel Dynamics, Inc. (STLD - Free Report) .
The top 10 holdings account for about 33.76% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Materials AlphaDEX Fund has lost about -1.90% so far, and is up about 14.40% over the last 12 months (as of 05/14/2018). FXZ has traded between $37.23 and $46.42 in this past 52-week period.
The ETF has a beta of 1.23 and standard deviation of 17.04% for the trailing three-year period, making it a medium risk choice in the space. With about 52 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Materials AlphaDEX Fund holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FXZ is a great option for investors seeking exposure to the Materials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Materials Select Sector SPDR Fund (XLB - Free Report) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR Fund has $5.02 B in assets, FlexShares Morningstar Global Upstream Natural Resources Index Fund has $5.77 B. XLB has an expense ratio of 0.13% and GUNR charges 0.46%.
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 Fund (FXZ)?
Launched on 05/08/2007, the First Trust Materials AlphaDEX Fund (FXZ - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Materials - Broad segment of the U.S. equity market.
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.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $322.35 M, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the U.S. 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 0.90%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Materials sector--about 81.10% of the portfolio. Industrials and Information Technology round out the top three.
Looking at individual holdings, Tahoe Resources Inc. accounts for about 3.58% of total assets, followed by Reliance Steel & Aluminum Co. (RS - Free Report) and Steel Dynamics, Inc. (STLD - Free Report) .
The top 10 holdings account for about 33.76% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Materials AlphaDEX Fund has lost about -1.90% so far, and is up about 14.40% over the last 12 months (as of 05/14/2018). FXZ has traded between $37.23 and $46.42 in this past 52-week period.
The ETF has a beta of 1.23 and standard deviation of 17.04% for the trailing three-year period, making it a medium risk choice in the space. With about 52 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Materials AlphaDEX Fund holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FXZ is a great option for investors seeking exposure to the Materials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Materials Select Sector SPDR Fund (XLB - Free Report) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR Fund has $5.02 B in assets, FlexShares Morningstar Global Upstream Natural Resources Index Fund has $5.77 B. XLB has an expense ratio of 0.13% and GUNR charges 0.46%.
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.