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Is First Trust Industrials/Producer Durables AlphaDEX ETF (FXR) a Strong ETF Right Now?
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Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Industrials/Producer Durables AlphaDEX ETF (FXR - Free Report) provides investors broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by First Trust Advisors, FXR has amassed assets over $1.90 billion, making it one of the larger ETFs in the Industrials ETFs. FXR seeks to match the performance of the StrataQuant Industrials Index before fees and expenses.
The StrataQuant Industrials 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.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.73%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 63.50% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Materials round out the top three.
Taking into account individual holdings, Genpact Limited (G - Free Report) accounts for about 1.53% of the fund's total assets, followed by Shift4 Payments, Inc. (class A) (FOUR - Free Report) and Howmet Aerospace Inc. (HWM - Free Report) .
The top 10 holdings account for about 13.65% of total assets under management.
Performance and Risk
So far this year, FXR has lost about -1.42%, and is up roughly 11.41% in the last one year (as of 02/24/2025). During this past 52-week period, the fund has traded between $66.85 and $83.27.
The ETF has a beta of 1.21 and standard deviation of 20.16% for the trailing three-year period, making it a medium risk choice in the space. With about 137 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Industrials/Producer Durables AlphaDEX ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI - Free Report) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $5.62 billion in assets, Industrial Select Sector SPDR ETF has $21.41 billion. VIS has an expense ratio of 0.09% and XLI 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 Industrials 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 Industrials/Producer Durables AlphaDEX ETF (FXR) a Strong ETF Right Now?
Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Industrials/Producer Durables AlphaDEX ETF (FXR - Free Report) provides investors broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by First Trust Advisors, FXR has amassed assets over $1.90 billion, making it one of the larger ETFs in the Industrials ETFs. FXR seeks to match the performance of the StrataQuant Industrials Index before fees and expenses.
The StrataQuant Industrials 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.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.73%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 63.50% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Materials round out the top three.
Taking into account individual holdings, Genpact Limited (G - Free Report) accounts for about 1.53% of the fund's total assets, followed by Shift4 Payments, Inc. (class A) (FOUR - Free Report) and Howmet Aerospace Inc. (HWM - Free Report) .
The top 10 holdings account for about 13.65% of total assets under management.
Performance and Risk
So far this year, FXR has lost about -1.42%, and is up roughly 11.41% in the last one year (as of 02/24/2025). During this past 52-week period, the fund has traded between $66.85 and $83.27.
The ETF has a beta of 1.21 and standard deviation of 20.16% for the trailing three-year period, making it a medium risk choice in the space. With about 137 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Industrials/Producer Durables AlphaDEX ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI - Free Report) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $5.62 billion in assets, Industrial Select Sector SPDR ETF has $21.41 billion. VIS has an expense ratio of 0.09% and XLI 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 Industrials 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.