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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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.41 billion, this makes it one of the larger ETFs in the Health Care ETFs. FXH is managed by First Trust Advisors. This particular fund, before fees and expenses, seeks to match the performance of the StrataQuant Health Care Index.
The StrataQuant Health Care Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.61%.
It's 12-month trailing dividend yield comes in at 0%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
FXH's heaviest allocation is in the Healthcare sector, which is about 100% of the portfolio.
When you look at individual holdings, Abbvie Inc. (ABBV - Free Report) accounts for about 2.47% of the fund's total assets, followed by Universal Health Services, Inc. (class B) (UHS - Free Report) and Regeneron Pharmaceuticals, Inc. (REGN - Free Report) .
FXH's top 10 holdings account for about 21.91% of its total assets under management.
Performance and Risk
So far this year, FXH has lost about -12.97%, and is down about -7.33% in the last one year (as of 05/02/2022). During this past 52-week period, the fund has traded between $106.27 and $128.11.
FXH has a beta of 0.86 and standard deviation of 22.86% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 86 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 $16.02 billion in assets, Health Care Select Sector SPDR ETF has $36.84 billion. VHT has an expense ratio of 0.10% and XLV 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 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.41 billion, this makes it one of the larger ETFs in the Health Care ETFs. FXH is managed by First Trust Advisors. This particular fund, before fees and expenses, seeks to match the performance of the StrataQuant Health Care Index.
The StrataQuant Health Care Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.61%.
It's 12-month trailing dividend yield comes in at 0%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
FXH's heaviest allocation is in the Healthcare sector, which is about 100% of the portfolio.
When you look at individual holdings, Abbvie Inc. (ABBV - Free Report) accounts for about 2.47% of the fund's total assets, followed by Universal Health Services, Inc. (class B) (UHS - Free Report) and Regeneron Pharmaceuticals, Inc. (REGN - Free Report) .
FXH's top 10 holdings account for about 21.91% of its total assets under management.
Performance and Risk
So far this year, FXH has lost about -12.97%, and is down about -7.33% in the last one year (as of 05/02/2022). During this past 52-week period, the fund has traded between $106.27 and $128.11.
FXH has a beta of 0.86 and standard deviation of 22.86% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 86 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 $16.02 billion in assets, Health Care Select Sector SPDR ETF has $36.84 billion. VHT has an expense ratio of 0.10% and XLV 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 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.