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Should You Invest in the First Trust Materials AlphaDEX ETF (FXZ)?
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Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the First Trust Materials AlphaDEX ETF (FXZ - Free Report) , 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.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.64 billion, making it one of the larger ETFs attempting to match the performance of the Materials - Broad segment of the equity market. FXZ seeks to match the performance of the StrataQuant Materials Index before fees and expenses.
The StrataQuant Materials 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.
Costs
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 on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.75%.
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 Materials sector--about 92.70% of the portfolio.
Looking at individual holdings, Nucor Corporation (NUE - Free Report) accounts for about 5.22% of total assets, followed by Steel Dynamics, Inc. (STLD - Free Report) and Cleveland-Cliffs Inc. (CLF - Free Report) .
The top 10 holdings account for about 44.62% of total assets under management.
Performance and Risk
The ETF return is roughly 3.96% and is down about -9.94% so far this year and in the past one year (as of 05/01/2023), respectively. FXZ has traded between $50.77 and $73.36 during this last 52-week period.
The ETF has a beta of 1.26 and standard deviation of 28.27% for the trailing three-year period, making it a medium risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Materials 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, FXZ is a sufficient option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Materials Select Sector SPDR ETF (XLB - Free Report) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $5.87 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $7.53 billion. XLB has an expense ratio of 0.10% and GUNR charges 0.46%.
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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Should You Invest in the First Trust Materials AlphaDEX ETF (FXZ)?
Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the First Trust Materials AlphaDEX ETF (FXZ - Free Report) , 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.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.64 billion, making it one of the larger ETFs attempting to match the performance of the Materials - Broad segment of the equity market. FXZ seeks to match the performance of the StrataQuant Materials Index before fees and expenses.
The StrataQuant Materials 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.
Costs
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 on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.75%.
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 Materials sector--about 92.70% of the portfolio.
Looking at individual holdings, Nucor Corporation (NUE - Free Report) accounts for about 5.22% of total assets, followed by Steel Dynamics, Inc. (STLD - Free Report) and Cleveland-Cliffs Inc. (CLF - Free Report) .
The top 10 holdings account for about 44.62% of total assets under management.
Performance and Risk
The ETF return is roughly 3.96% and is down about -9.94% so far this year and in the past one year (as of 05/01/2023), respectively. FXZ has traded between $50.77 and $73.36 during this last 52-week period.
The ETF has a beta of 1.26 and standard deviation of 28.27% for the trailing three-year period, making it a medium risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Materials 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, FXZ is a sufficient option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Materials Select Sector SPDR ETF (XLB - Free Report) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $5.87 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $7.53 billion. XLB has an expense ratio of 0.10% and GUNR charges 0.46%.
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.