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Is First Trust Health Care AlphaDEX ETF (FXH) a Strong ETF Right Now?
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Designed to provide broad exposure to the Health Care ETFs category of the market, the First Trust Health Care AlphaDEX ETF (FXH - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 managed by First Trust Advisors. FXH has been able to amass assets over $1.58 billion, making it one of the larger ETFs in the Health Care ETFs. FXH seeks to match the performance of the StrataQuant Health Care Index before fees and expenses.
The StrataQuant Health Care Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 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.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.61%.
FXH's 12-month trailing dividend yield is 0%.
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.
This ETF has heaviest allocation in the Healthcare sector - about 100% of the portfolio.
Looking at individual holdings, Cigna Corporation (CI - Free Report) accounts for about 2.03% of total assets, followed by Molina Healthcare, Inc. (MOH - Free Report) and Hca Healthcare, Inc. (HCA - Free Report) .
FXH's top 10 holdings account for about 19.77% of its total assets under management.
Performance and Risk
So far this year, FXH has added about 12.54%, and is up about 24.66% in the last one year (as of 10/29/2021). During this past 52-week period, the fund has traded between $95.38 and $128.11.
The ETF has a beta of 0.87 and standard deviation of 23.45% for the trailing three-year period, making it a medium risk choice in the space. With about 88 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Health Care AlphaDEX ETF is an excellent option for investors seeking to outperform the Health Care ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Health Care ETF (VHT - Free Report) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV - Free Report) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $16.58 billion in assets, Health Care Select Sector SPDR ETF has $31.27 billion. VHT has an expense ratio of 0.10% and XLV charges 0.12%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care 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 Health Care AlphaDEX ETF (FXH) a Strong ETF Right Now?
Designed to provide broad exposure to the Health Care ETFs category of the market, the First Trust Health Care AlphaDEX ETF (FXH - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 managed by First Trust Advisors. FXH has been able to amass assets over $1.58 billion, making it one of the larger ETFs in the Health Care ETFs. FXH seeks to match the performance of the StrataQuant Health Care Index before fees and expenses.
The StrataQuant Health Care Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 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.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.61%.
FXH's 12-month trailing dividend yield is 0%.
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.
This ETF has heaviest allocation in the Healthcare sector - about 100% of the portfolio.
Looking at individual holdings, Cigna Corporation (CI - Free Report) accounts for about 2.03% of total assets, followed by Molina Healthcare, Inc. (MOH - Free Report) and Hca Healthcare, Inc. (HCA - Free Report) .
FXH's top 10 holdings account for about 19.77% of its total assets under management.
Performance and Risk
So far this year, FXH has added about 12.54%, and is up about 24.66% in the last one year (as of 10/29/2021). During this past 52-week period, the fund has traded between $95.38 and $128.11.
The ETF has a beta of 0.87 and standard deviation of 23.45% for the trailing three-year period, making it a medium risk choice in the space. With about 88 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Health Care AlphaDEX ETF is an excellent option for investors seeking to outperform the Health Care ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Health Care ETF (VHT - Free Report) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV - Free Report) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $16.58 billion in assets, Health Care Select Sector SPDR ETF has $31.27 billion. VHT has an expense ratio of 0.10% and XLV charges 0.12%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care 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.