The First Trust Technology AlphaDEX ETF (
FXL Quick Quote FXL - Free Report) was launched on 05/08/2007, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology - 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 also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - 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 $1.06 billion, making it one of the larger ETFs attempting to match the performance of the Technology - Broad segment of the equity market. FXL seeks to match the performance of the StrataQuant Technology Index before fees and expenses.
The StrataQuant Technology 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 on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.27%.
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 Information Technology sector--about 82.70% of the portfolio. Industrials and Telecom round out the top three.
Looking at individual holdings, Meta Platforms Inc. (class A) (
META Quick Quote META - Free Report) accounts for about 2.61% of total assets, followed by Cirrus Logic, Inc. ( CRUS Quick Quote CRUS - Free Report) and Skyworks Solutions, Inc. ( SWKS Quick Quote SWKS - Free Report) .
The top 10 holdings account for about 19.34% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Technology AlphaDEX ETF has added about 11.52% so far, and is up about 4.84% over the last 12 months (as of 05/25/2023). FXL has traded between $84.85 and $108.72 in this past 52-week period.
The ETF has a beta of 1.18 and standard deviation of 26.89% for the trailing three-year period, making it a medium risk choice in the space. With about 100 holdings, it effectively diversifies company-specific risk.
First Trust Technology AlphaDEX ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FXL is an outstanding option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Technology Select Sector SPDR ETF (
XLK Quick Quote XLK - Free Report) tracks Technology Select Sector Index and the Vanguard Information Technology ETF ( VGT Quick Quote VGT - Free Report) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $44.13 billion in assets, Vanguard Information Technology ETF has $47.18 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%. Bottom Line
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