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Is First Trust Health Care AlphaDEX ETF (FXH) a Strong ETF Right Now?
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Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Health Care AlphaDEX ETF (FXH - Free Report) provides investors 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FXH has been able to amass assets over $1.09 billion, making it one of the larger ETFs in the Health Care ETFs. FXH 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
FXH's 12-month trailing dividend yield is 0.39%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FXH, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
When you look at individual holdings, Natera, Inc. (NTRA - Free Report) accounts for about 2.99% of the fund's total assets, followed by Doximity, Inc. (class A) (DOCS - Free Report) and Insulet Corporation (PODD - Free Report) .
Its top 10 holdings account for approximately 25.33% of FXH's total assets under management.
Performance and Risk
The ETF has gained about 6.50% and is up about 8.74% so far this year and in the past one year (as of 02/03/2025), respectively. FXH has traded between $101.59 and $113.83 during this last 52-week period.
The ETF has a beta of 0.76 and standard deviation of 16.20% for the trailing three-year period, making it a medium risk choice in the space. With about 78 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Health Care AlphaDEX ETF is an excellent option for investors seeking to outperform the Health Care ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $17.48 billion in assets, Health Care Select Sector SPDR ETF has $39.02 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?
Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Health Care AlphaDEX ETF (FXH - Free Report) provides investors 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FXH has been able to amass assets over $1.09 billion, making it one of the larger ETFs in the Health Care ETFs. FXH 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
FXH's 12-month trailing dividend yield is 0.39%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FXH, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
When you look at individual holdings, Natera, Inc. (NTRA - Free Report) accounts for about 2.99% of the fund's total assets, followed by Doximity, Inc. (class A) (DOCS - Free Report) and Insulet Corporation (PODD - Free Report) .
Its top 10 holdings account for approximately 25.33% of FXH's total assets under management.
Performance and Risk
The ETF has gained about 6.50% and is up about 8.74% so far this year and in the past one year (as of 02/03/2025), respectively. FXH has traded between $101.59 and $113.83 during this last 52-week period.
The ETF has a beta of 0.76 and standard deviation of 16.20% for the trailing three-year period, making it a medium risk choice in the space. With about 78 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Health Care AlphaDEX ETF is an excellent option for investors seeking to outperform the Health Care ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $17.48 billion in assets, Health Care Select Sector SPDR ETF has $39.02 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.