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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.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - 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 $650.77 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.
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 0.62%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.92%.
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 Energy sector--about 98% of the portfolio.
Looking at individual holdings, Valero Energy Corporation (VLO - Free Report) accounts for about 4.91% of total assets, followed by Ovintiv Inc. (OVV - Free Report) and Marathon Oil Corporation (MRO - Free Report) .
The top 10 holdings account for about 42.06% of total assets under management.
Performance and Risk
The ETF return is roughly 12.05% and it's up approximately 22.12% so far this year and in the past one year (as of 04/23/2024), respectively. FXN has traded between $14.30 and $19.35 during this last 52-week period.
The ETF has a beta of 1.68 and standard deviation of 29.84% 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.
Alternatives
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 the best option 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 $8.89 billion in assets, Energy Select Sector SPDR ETF has $41.07 billion. VDE has an expense ratio of 0.10% and XLE 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 Energy AlphaDEX ETF (FXN)?
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.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - 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 $650.77 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.
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 0.62%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.92%.
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 Energy sector--about 98% of the portfolio.
Looking at individual holdings, Valero Energy Corporation (VLO - Free Report) accounts for about 4.91% of total assets, followed by Ovintiv Inc. (OVV - Free Report) and Marathon Oil Corporation (MRO - Free Report) .
The top 10 holdings account for about 42.06% of total assets under management.
Performance and Risk
The ETF return is roughly 12.05% and it's up approximately 22.12% so far this year and in the past one year (as of 04/23/2024), respectively. FXN has traded between $14.30 and $19.35 during this last 52-week period.
The ETF has a beta of 1.68 and standard deviation of 29.84% 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.
Alternatives
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 the best option 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 $8.89 billion in assets, Energy Select Sector SPDR ETF has $41.07 billion. VDE has an expense ratio of 0.10% and XLE 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.