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.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.55 billion, making it one of the larger 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.
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 0.61%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 0.76%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector--about 68.20% of the portfolio. Materials and Information Technology round out the top three.
Looking at individual holdings, Fedex Corporation (
FDX Quick Quote FDX - Free Report) accounts for about 1.54% of total assets, followed by Mdu Resources Group, Inc. ( MDU Quick Quote MDU - Free Report) and Mohawk Industries, Inc. ( MHK Quick Quote MHK - Free Report) .
The top 10 holdings account for about 14.18% of total assets under management.
Performance and Risk
Year-to-date, the First Trust IndustrialsProducer Durables AlphaDEX ETF has lost about -16.65% so far, and is down about -15.88% over the last 12 months (as of 08/31/2022). FXR has traded between $47.30 and $63 in this past 52-week period.
The ETF has a beta of 1.25 and standard deviation of 28.36% for the trailing three-year period, making it a medium risk choice in the space. With about 131 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 $3.51 billion in assets, Industrial Select Sector SPDR ETF has $12.95 billion. VIS has an expense ratio of 0.10% and XLI charges 0.10%. Bottom Line
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