Designed to provide broad exposure to the Industrials - Broad segment of the equity market, the First Trust IndustrialsProducer Durables AlphaDEX ETF (
FXR Quick Quote FXR - Free Report) is a passively managed exchange traded fund launched on 05/08/2007.
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.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.73 billion, making it one of the largest ETFs attempting to match the performance of the Industrials - Broad segment of the equity market. FXR 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 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 0.61%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 0.68%.
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 Industrials sector--about 67% of the portfolio. Materials and Information Technology round out the top three.
Looking at individual holdings, Agco Corporation (
AGCO Quick Quote AGCO - Free Report) accounts for about 1.63% of total assets, followed by Owens Corning ( OC Quick Quote OC - Free Report) and Robert Half International Inc. ( RHI Quick Quote RHI - Free Report) .
The top 10 holdings account for about 14.30% of total assets under management.
Performance and Risk
The ETF has lost about -13.82% so far this year and is down about -9.43% in the last one year (as of 04/27/2022). In that past 52-week period, it has traded between $53.29 and $63.
The ETF has a beta of 1.29 and standard deviation of 27.52% for the trailing three-year period, making it a medium risk choice in the space. With about 135 holdings, it effectively diversifies company-specific risk.
First Trust IndustrialsProducer Durables 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, FXR is a sufficient option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Industrials ETF (
VIS Quick Quote VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF ( XLI Quick Quote XLI - Free Report) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $4.43 billion in assets, Industrial Select Sector SPDR ETF has $14.64 billion. VIS has an expense ratio of 0.10% and XLI charges 0.10%. Bottom Line
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