Launched on 05/08/2007, the First Trust Consumer Staples AlphaDEX ETF (
FXG Quick Quote FXG - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Consumer Staples - Broad segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Staples - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $264.87 million, making it one of the average sized ETFs attempting to match the performance of the Consumer Staples - Broad segment of the equity market. FXG seeks to match the performance of the StrataQuant Consumer Staples Index before fees and expenses.
The StrataQuant Consumer Staples 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.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.63%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.39%.
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.
This ETF has heaviest allocation in the Consumer Staples sector--about 88.60% of the portfolio. Healthcare and Materials round out the top three.
Looking at individual holdings, Archer-Daniels-Midland Company (
ADM Quick Quote ADM - Free Report) accounts for about 4.35% of total assets, followed by Bunge Limited ( BG Quick Quote BG - Free Report) and Darling Ingredients Inc. ( DAR Quick Quote DAR - Free Report) .
The top 10 holdings account for about 40.29% of total assets under management.
Performance and Risk
The ETF has gained about 15.65% and it's up approximately 19.40% so far this year and in the past one year (as of 11/09/2021), respectively. FXG has traded between $50.04 and $60.68 during this last 52-week period.
The ETF has a beta of 0.71 and standard deviation of 18.56% for the trailing three-year period, making it a medium risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers.
First Trust Consumer Staples AlphaDEX ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FXG is a good option for those seeking exposure to the Consumer Staples ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Consumer Staples ETF (
VDC Quick Quote VDC - Free Report) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR ETF ( XLP Quick Quote XLP - Free Report) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $6.03 billion in assets, Consumer Staples Select Sector SPDR ETF has $11.95 billion. VDC has an expense ratio of 0.10% and XLP charges 0.12%. Bottom Line
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