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Is First Trust Health Care AlphaDEX ETF (FXH) a Strong ETF Right Now?
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The First Trust Health Care AlphaDEX ETF (FXH - Free Report) was launched on 05/08/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $1.33 billion, this makes it one of the larger ETFs in the Health Care ETFs. FXH is managed by First Trust Advisors. This particular fund seeks to match the performance of the StrataQuant Health Care Index before fees and expenses.
The StrataQuant Health Care Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.62%.
The fund has a 12-month trailing dividend yield of 0.28%.
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.
Representing 100% of the portfolio, the fund has heaviest allocation to the Healthcare sector.
When you look at individual holdings, Cardinal Health, Inc. (CAH - Free Report) accounts for about 2.41% of the fund's total assets, followed by Medpace Holdings, Inc. (MEDP - Free Report) and Molina Healthcare, Inc. (MOH - Free Report) .
FXH's top 10 holdings account for about 21.56% of its total assets under management.
Performance and Risk
So far this year, FXH has added about 5.93%, and it's up approximately 4.80% in the last one year (as of 03/29/2024). During this past 52-week period, the fund has traded between $90.04 and $110.94.
FXH has a beta of 0.75 and standard deviation of 16.50% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 85 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Health Care AlphaDEX ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Health Care ETF (VHT - Free Report) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV - Free Report) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $18.20 billion in assets, Health Care Select Sector SPDR ETF has $41.26 billion. VHT has an expense ratio of 0.10% and XLV charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs.
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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Is First Trust Health Care AlphaDEX ETF (FXH) a Strong ETF Right Now?
The First Trust Health Care AlphaDEX ETF (FXH - Free Report) was launched on 05/08/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $1.33 billion, this makes it one of the larger ETFs in the Health Care ETFs. FXH is managed by First Trust Advisors. This particular fund seeks to match the performance of the StrataQuant Health Care Index before fees and expenses.
The StrataQuant Health Care Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.62%.
The fund has a 12-month trailing dividend yield of 0.28%.
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.
Representing 100% of the portfolio, the fund has heaviest allocation to the Healthcare sector.
When you look at individual holdings, Cardinal Health, Inc. (CAH - Free Report) accounts for about 2.41% of the fund's total assets, followed by Medpace Holdings, Inc. (MEDP - Free Report) and Molina Healthcare, Inc. (MOH - Free Report) .
FXH's top 10 holdings account for about 21.56% of its total assets under management.
Performance and Risk
So far this year, FXH has added about 5.93%, and it's up approximately 4.80% in the last one year (as of 03/29/2024). During this past 52-week period, the fund has traded between $90.04 and $110.94.
FXH has a beta of 0.75 and standard deviation of 16.50% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 85 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Health Care AlphaDEX ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Health Care ETF (VHT - Free Report) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV - Free Report) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $18.20 billion in assets, Health Care Select Sector SPDR ETF has $41.26 billion. VHT has an expense ratio of 0.10% and XLV charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs.
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.