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Should You Invest in the First Trust Utilities AlphaDEX ETF (FXU)?
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Launched on 05/08/2007, the First Trust Utilities AlphaDEX ETF (FXU - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Utilities - 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. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $223.84 million, making it one of the average sized ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. FXU seeks to match the performance of the StrataQuant Utilities Index before fees and expenses.
The StrataQuant Utilities 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
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 0.64%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 2.52%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector--about 90% of the portfolio. Industrials and Energy round out the top three.
Looking at individual holdings, Vistra Corp. (VST - Free Report) accounts for about 4.37% of total assets, followed by Public Service Enterprise Group Incorporated (PEG - Free Report) and Hawaiian Electric Industries, Inc. (HE - Free Report) .
The top 10 holdings account for about 39.66% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Utilities AlphaDEX ETF return is roughly 0.22% so far, and it's up approximately 4.09% over the last 12 months (as of 03/12/2024). FXU has traded between $27.35 and $33.61 in this past 52-week period.
The ETF has a beta of 0.66 and standard deviation of 17.53% for the trailing three-year period, making it a medium risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Utilities 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. FXU, then, is not a suitable option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. Instead, there are better ETFs in the space to consider.
Vanguard Utilities ETF (VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $4.98 billion in assets, Utilities Select Sector SPDR ETF has $12.38 billion. VPU has an expense ratio of 0.10% and XLU charges 0.09%.
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 Utilities AlphaDEX ETF (FXU)?
Launched on 05/08/2007, the First Trust Utilities AlphaDEX ETF (FXU - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Utilities - 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. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $223.84 million, making it one of the average sized ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. FXU seeks to match the performance of the StrataQuant Utilities Index before fees and expenses.
The StrataQuant Utilities 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
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 0.64%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 2.52%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector--about 90% of the portfolio. Industrials and Energy round out the top three.
Looking at individual holdings, Vistra Corp. (VST - Free Report) accounts for about 4.37% of total assets, followed by Public Service Enterprise Group Incorporated (PEG - Free Report) and Hawaiian Electric Industries, Inc. (HE - Free Report) .
The top 10 holdings account for about 39.66% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Utilities AlphaDEX ETF return is roughly 0.22% so far, and it's up approximately 4.09% over the last 12 months (as of 03/12/2024). FXU has traded between $27.35 and $33.61 in this past 52-week period.
The ETF has a beta of 0.66 and standard deviation of 17.53% for the trailing three-year period, making it a medium risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Utilities 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. FXU, then, is not a suitable option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. Instead, there are better ETFs in the space to consider.
Vanguard Utilities ETF (VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $4.98 billion in assets, Utilities Select Sector SPDR ETF has $12.38 billion. VPU has an expense ratio of 0.10% and XLU charges 0.09%.
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.