The First Trust Consumer Discretionary AlphaDEX ETF (
FXD Quick Quote FXD - Free Report) was launched on 05/08/2007, and is a passively managed exchange traded fund designed to offer broad exposure to the Consumer Discretionary - 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 Discretionary - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 14, placing it in bottom 13%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $404.51 million, making it one of the larger ETFs attempting to match the performance of the Consumer Discretionary - Broad segment of the equity market. FXD seeks to match the performance of the StrataQuant Consumer Discretionary Index before fees and expenses.
The StrataQuant Consumer Discretionary Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.61%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.16%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Discretionary sector--about 81.50% of the portfolio. Telecom and Industrials round out the top three.
Looking at individual holdings, Kohl's Corporation (
KSS Quick Quote KSS - Free Report) accounts for about 1.93% of total assets, followed by Nexstar Media Group, Inc. ( NXST Quick Quote NXST - Free Report) and Paramount Global (class B) ( PARA Quick Quote PARA - Free Report) .
The top 10 holdings account for about 16.36% of total assets under management.
Performance and Risk
The ETF has lost about -26.52% so far this year and is down about -24.06% in the last one year (as of 06/30/2022). In that past 52-week period, it has traded between $43.78 and $65.57.
The ETF has a beta of 1.31 and standard deviation of 32.28% for the trailing three-year period, making it a medium risk choice in the space. With about 124 holdings, it effectively diversifies company-specific risk.
First Trust Consumer Discretionary 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, FXD is a good option for those seeking exposure to the Consumer Discretionary ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Consumer Discretionary ETF (
VCR Quick Quote VCR - Free Report) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF ( XLY Quick Quote XLY - Free Report) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $4.26 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $14.40 billion. VCR has an expense ratio of 0.10% and XLY charges 0.10%. Bottom Line
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