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Should You Invest in the First Trust Energy AlphaDEX ETF (FXN)?

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Launched on 05/08/2007, the First Trust Energy AlphaDEX ETF (FXN - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - 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.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 16, placing it in bottom 0%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $535.72 million, making it one of the larger ETFs attempting to match the performance of the Energy - Broad segment of the equity market. FXN seeks to match the performance of the StrataQuant Energy Index before fees and expenses.

The StrataQuant Energy 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.


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 0.62%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 3.12%.

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 Energy sector--about 97.40% of the portfolio.

Looking at individual holdings, Southwestern Energy Company (SWN - Free Report) accounts for about 4.33% of total assets, followed by Coterra Energy Inc. (CTRA - Free Report) and Hf Sinclair Corp. (DINO - Free Report) .

The top 10 holdings account for about 39.44% of total assets under management.

Performance and Risk

So far this year, FXN has lost about -0.78%, and was up about 6.19% in the last one year (as of 02/21/2024). During this past 52-week period, the fund has traded between $14.30 and $18.25.

The ETF has a beta of 1.67 and standard deviation of 30.74% for the trailing three-year period, making it a high risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers.


First Trust Energy AlphaDEX ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FXN, then, is not a great choice for investors seeking exposure to the Energy ETFs segment of the market. Instead, there are better ETFs in the space to consider.

Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $8.09 billion in assets, Energy Select Sector SPDR ETF has $35.19 billion. VDE has an expense ratio of 0.10% and XLE charges 0.10%.

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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