If you're interested in broad exposure to the Industrials - Broad segment of the equity market, look no further than the First Trust Industrials/Producer Durables AlphaDEX ETF (
FXR Quick Quote FXR - Free Report) , 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 are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.69 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.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 0.78%.
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 69.80% of the portfolio. Materials and Financials round out the top three.
Looking at individual holdings, Builders Firstsource, Inc. (
BLDR Quick Quote BLDR - Free Report) accounts for about 1.91% of total assets, followed by Louisiana-Pacific Corporation ( LPX Quick Quote LPX - Free Report) and Owens Corning ( OC Quick Quote OC - Free Report) .
The top 10 holdings account for about 15.57% of total assets under management.
Performance and Risk
The ETF has added roughly 14.60% and is up about 11.87% so far this year and in the past one year (as of 09/13/2023), respectively. FXR has traded between $45.72 and $62.05 during this last 52-week period.
The ETF has a beta of 1.24 and standard deviation of 20.93% for the trailing three-year period, making it a medium risk choice in the space. With about 130 holdings, it effectively diversifies company-specific risk.
First Trust Industrials/Producer Durables 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, FXR is an outstanding option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
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 $4.37 billion in assets, Industrial Select Sector SPDR ETF has $15.13 billion. VIS has an expense ratio of 0.10% and XLI charges 0.10%. Bottom Line
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Zacks ETF Center.